Decision on Accepting Additional Business Country Jeans Co. has an annual plant
ID: 2494339 • Letter: D
Question
Decision on Accepting Additional Business Country Jeans Co. has an annual plant capacity of 65,700 units, and current production is 46,800 units. Monthly fixed costs are $41,900, and variable costs are $25 per unit. The present selling price is $36 per unit. On February 2, 2014, the company received an offer from Miller Company for 16,200 units of the product at $26 each. Miller Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Country Jeans Co. Prepare a differential analysis on whether to reject (Alternative 1) or accept (Alternative 2) the Miller order. If an amount is zerp, enter zero "0". Having unused capacity available is select to this decision. The differential revenue is select than the differential cost. Thus, accepting this additional business will result in a net What is the minimum price per unit that would produce a positive contribution margin? Round your answer to two decimal places.Explanation / Answer
B)
Having unused capacity available is independent to this decision. The differential revenue is greater than the differential cost. Thus accepting this order will result in net profit
c)
Minmum price should be greater than the variable cost that is $ 25 per unit. Anything over and above $ 25 will result in positive contribution margin.
Reject order additional revenue if order is accepted accept order Revenue 1,684,800 421,200 2,106,000 variable manufacturing cost 1,170,000 405,000 1,575,000 Income 514,800 531,000Related Questions
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