1 - A business received an offer from an exporter for 24,630 units of product at

Question

1 -

A business received an offer from an exporter for 24,630 units of product at $19.00 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available:

Determine the amount of gain or loss from the acceptance of the offer

2 - A business received an offer from an exporter for 26,648 units of product at $16.00 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available:

Determine the differential cost from the acceptance of the offer

1 -

A business received an offer from an exporter for 24,630 units of product at $19.00 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available:

Domestic unit sales price $22.00 Unit manufacturing costs:    Variable $10    Fixed $3

Determine the amount of gain or loss from the acceptance of the offer

2 - A business received an offer from an exporter for 26,648 units of product at $16.00 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available:

Domestic unit sales price $25.00 Unit manufacturing costs:    Variable $10    Fixed $5

Determine the differential cost from the acceptance of the offer

3 - A business received an offer from an exporter for 10,000 units of product at $17.50 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data is available:

Explanation / Answer

Answer 1

Offer recieved for units is 24,630

at selling price of $19

Variable cost are $10

so the gain will be

=24,630(19-10) = $221,670

Answer 2

Offer received for 26,648 unit

at selling price of $16

At it is not affecting normal production only the variable cost will be incurred which is $10

Which is our differential cost for producing the units

so the amount of differential cost will be = 26,648*10 =$ 266,480

Answer 3

Offer received for 10,000 units at selling price of $17.5

so the differential revenue will be calculated as follows

Revenue as selling price of $20                                                200,000

Revenue as selling price of $17.5                                             175,000

                    Differencei.e Loss                                                  (25,000)

= 175,000-25,000

= $150,000                                                                            

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