1.

Product A is normally sold for $40 per unit. A special price of $34 is offered for the export market. The variable production cost is $24 per unit. An additional export tariff of 15% of revenue must be paid for all export products. Assume there is sufficient capacity for the special order.

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a. 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".

Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) March 16

	Reject Order (Alternative 1)	Accept Order (Alternative 2)	Differential Effects (Alternative 2)
Revenues, per unit	$fill in the blank cf39c2fe8ff9036_1	$fill in the blank cf39c2fe8ff9036_2	$fill in the blank cf39c2fe8ff9036_3
Costs:
Variable manufacturing costs, per unit	fill in the blank cf39c2fe8ff9036_4	fill in the blank cf39c2fe8ff9036_5	fill in the blank cf39c2fe8ff9036_6
Export tariff, per unit	fill in the blank cf39c2fe8ff9036_7	fill in the blank cf39c2fe8ff9036_8	fill in the blank cf39c2fe8ff9036_9
Profit (loss), per unit	$fill in the blank cf39c2fe8ff9036_10	$fill in the blank cf39c2fe8ff9036_11	$fill in the blank cf39c2fe8ff9036_12

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b. Should the special order be rejected (Alternative 1) or accepted (Alternative 2)?

Accept the special orderReject the special order

A condensed income statement by product line for Warrick Beverage Inc. indicated the following for Mango Cola for the past year:

Sales	$236,400
Cost of goods sold	(110,000)
Gross profit	$126,400
Operating expenses	(146,000)
Operating loss	$(19,600)

It is estimated that 13% of the cost of goods sold represents fixed factory overhead costs and that 19% of the operating expenses are fixed. Because Mango Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued.

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a. Prepare a differential analysis dated February 29 to determine whether Mango Cola should be continued (Alternative 1) or discontinued (Alternative 2). If an amount is zero, enter "0". If required, use a minus sign to indicate a loss.

Differential Analysis Continue (Alt. 1) or Discontinue (Alt. 2) Mango Cola February 29

	Continue Mango Cola (Alternative 1)	Discontinue Mango Cola (Alternative 2)	Differential Effects (Alternative 2)
Revenues	$fill in the blank 24eefafd5005078_1	$fill in the blank 24eefafd5005078_2	$fill in the blank 24eefafd5005078_3
Costs:
Variable cost of goods sold	fill in the blank 24eefafd5005078_4	fill in the blank 24eefafd5005078_5	fill in the blank 24eefafd5005078_6
Variable operating expenses	fill in the blank 24eefafd5005078_7	fill in the blank 24eefafd5005078_8	fill in the blank 24eefafd5005078_9
Fixed costs	fill in the blank 24eefafd5005078_10	fill in the blank 24eefafd5005078_11	fill in the blank 24eefafd5005078_12
Profit (Loss)	$fill in the blank 24eefafd5005078_13	$fill in the blank 24eefafd5005078_14	$fill in the blank 24eefafd5005078_15

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b. Should Mango Cola be retained?

YesNo