Accept Business at Special Price

Product A is normally sold for $42 per unit. A special price of $32 is offered for the export market. The variable production cost is $26 per unit. An additional export tariff of 12% 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	$_______	$_______	$_______
Costs:
Variable manufacturing costs, per unit	_______	________	_______
Export tariff, per unit	_______	________	_______
Profit (loss), per unit	$_______	$_______	$_______

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

Accept the special order/Reject the special order