Decision on Accepting Additional Business

Down Home Jeans Co. has an annual plant capacity of 63,300 units, and current production is 46,400 units. Monthly fixed costs are $38,300, and variable costs are $25 per unit. The present selling price is $38 per unit. On February 2, 2014, the company received an offer from Fields Company for 13,100 units of the product at $28 each. Fields Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Down Home Jeans Co.

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a. Prepare a differential analysis on whether to reject (Alternative 1) or accept (Alternative 2) the Fields order. If an amount is zero, enter zero "0".