Question
Decision on Accepting Additional Business Down Home Jeans Co. has an annual plant capacity of 64,100 units, and current production is 45,200 units. Monthly fixed
Decision on Accepting Additional Business
Down Home Jeans Co. has an annual plant capacity of 64,100 units, and current production is 45,200 units. Monthly fixed costs are $41,400, and variable costs are $25 per unit. The present selling price is $34 per unit. On February 2, 2014, the company received an offer from Fields Company for 13,300 units of the product at $26 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.
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".
Please help.
Differential Analysis Reject Order(Alt.1) or Accept Order (Alt. 2) February 2, 2014 Reject Order (Alternative 1) Accept order (Alternative 2) Differential Effect on Income (Alternative 2) 345800 345800 Costs: Variable manufacturing costs 332500 332500 Income (Loss) 13300 13300
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started