1. Accept Business at Special Price

Product R is normally sold for $47 per unit. A special price of $31 is offered for the export market. The variable production cost is $26 per unit. An additional export tariff of 14% of revenue must be paid for all export products. Assume that there is sufficient capacity for the special order.

Prepare a differential analysis dated March 16, on whether to reject (Alternative 1) or accept (Alternative 2) the special order. If required, round your answers to two decimal places. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign.

2. Differential Analysis for a Lease-or-Sell Decision

Inman Construction Company is considering selling excess machinery with a book value of $280,100 (original cost of $399,900 less accumulated depreciation of $119,800) for $275,200, less a 5% brokerage commission. Alternatively, the machinery can be leased to another company for a total of $283,500 for five years, after which it is expected to have no residual value. During the period of the lease, Inman Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $26,400.

a. Prepare a differential analysis, dated May 25 to determine whether Inman should lease (Alternative 1) or sell (Alternative 2) the machinery. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) March 16 Reject Order Accept Order (Alternative 1) (Alternative 2) Differential Effect on Income (Alternative 2) Revenues, per unit Costs: Variable manufacturing costs, per unit Export tariff, per unit Income (Loss), per unit Should the special order be rejected (Alternative 1) or accepted (Alternative 2)? Differential Analysis Lease Machinery (Alt. 1) or Sell Machinery (Alt. 2) May 25 Differential Effect Lease Machinery Sell Machinery on Income (Alternative 1) (Alternative 2) (Alternative 2) Revenues Costs Income (Loss) $ b. On the basis of the data presented, would it be advisable to lease or sell the machinery? Explain. The net from selling is