Accept Business at Special Price

Product MM is normally sold for $410 per unit. A special price of $380 is offered for the export market. The variable production cost is $270 per unit. An additional export tariff of 30% of revenue must be paid for all export products. Assume that there is sufficient capacity for the special order.

Question Content Area

Prepare a differential analysis dated March 5 on whether to Reject Order (Alternative 1) or Accept Order (Alternative 2). If an amount is zero, enter "0". 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 5

	Reject Order (Alternative 1)	Accept Order (Alternative 2)	Differential Effect (Alternative 2)
Revenues, per unit	$fill in the blank 5387daf39fcb019_1	$fill in the blank 5387daf39fcb019_2	$fill in the blank 5387daf39fcb019_3
Costs:
Variable manufacturing costs, per unit	fill in the blank 5387daf39fcb019_4	fill in the blank 5387daf39fcb019_5	fill in the blank 5387daf39fcb019_6
Export tariff, per unit	fill in the blank 5387daf39fcb019_7	fill in the blank 5387daf39fcb019_8	fill in the blank 5387daf39fcb019_9
Profit (loss), per unit	$fill in the blank 5387daf39fcb019_10	$fill in the blank 5387daf39fcb019_11	$fill in the blank 5387daf39fcb019_12

Question Content Area

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

Reject the special orderAccept the special orderThe company is indifferent since the result is the same regardless of which alternative is chosen.