Product R is normally sold for $54.40 per unit. A special price of $44.80 is off
ID: 2575142 • Letter: P
Question
Product R is normally sold for $54.40 per unit. A special price of $44.80 is offered for the export market. The variable production cost is $27.18 per unit. An additional export tariff of 40% of revenue must be paid for all export products. Assume there is sufficient capacity for the special order.
1. Prepare a differential analysis
The area of accounting concerned with the effect of alternative courses of action on revenues and costs.
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.
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Differential Analysis
Reject Order (Alternative 1) or Accept Order (Alternative 2)
October 23
1
Reject Order
Accept Order
Differential Effect on Income
2
(Alternative 1)
(Alternative 2)
(Alternative 2)
3
4
Costs:
5
6
7
Final Question
2. Should the special order be rejected (Alternative 1) or accepted (Alternative 2)?
Reject the special order
The company is indifferent since the result is the same regardless of which alternative is chosen
Accept the special order
Should the special order be rejected (Alternative 1) or accepted (Alternative 2)?
Reject the special order
The company is indifferent since the result is the same regardless of which alternative is chosen
Accept the special order
Differential Analysis
Reject Order (Alternative 1) or Accept Order (Alternative 2)
October 23
Explanation / Answer
1)
-17.92 [44.80*.40
]
2)Reject the special order ,as acceptance of special offer will result in net loss of -.30 per unit sold.
Reject offer Accept offer Differential Revenue 0 44.80 44.80 less: variable cost of production 0 -27.18 -27.18 Export tariff 0-17.92 [44.80*.40
]
-17.92 Net Income 0 -.30 -.30Related Questions
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