Question

Product R is normally sold for $52 per unit. A special price of $42 is offered for the export market. The variable production cost is $30 per unit. An additional export tariff of 30% of revenue must be paid for all export products. Assume there is sufficient capacity for the special order.

	Required:
1.	Prepare a differential analysis dated October 23 on whether to reject (Alternative 1) or accept (Alternative 2) the special order. Refer to the list of Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required.
2.	Should the special order be rejected (Alternative 1) or accepted (Alternative 2)?

Answer 1

Answer :-

1 ) :-

Differential analysis
Reject (Alternative 1) or Accept (Alternative 2)
October 23
	Reject order	Accept order	Differential effect on income
	Alternative 1	Alternative 2	Alternative 2
Revenue ,per unit	$0	$42	$42
Costs :
Variable manufacturing costs per unit	$0	( $30 )	( $30 )
Export tariff per unit	$0	= $42 * 30% = ( $12.6 )	= $42 * 30% = ( $12.6 )
Income ( Loss ) per unit	$0	= $42 - $30 - $12.6 = ( $0.6 )	= $42 - $30 - $12.6 = ( $0.6 )

2 ) :-

The special order be rejected should be rejected .