Decision on Accepting Additional Business

Homestead Jeans Co$.$ has an annual plant capacity of $65,000$ units, and current production is $45,000$ units. Monthly fixed costs are

$$54,000,$ and variable costs are $$29$ per unit. The present selling price is $$42$ per unit. On November $12$ of the current year, the

company received an offer from Dawkins Company for $18,000$ units of the product at $$32$ each. Dawkins 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 Homestead Jeans Co$.$

a$.$ Prepare a differential analysis dated November $12$ on whether to reject $($Alternative $1)$ or accept $($Alternative $2)$ the Dawkins

order. If an amount is zero, enter $"0".$ If required, use a minus sign to indicate a loss.

Differential Analysis

Reject Order $($Alt$.1)$ or Accept Order $($Alt$.2)$

November $12$

b$.$ Having unused capacity available is

to this decision. The differential revenue is $.$

than the differential cost. Thus, accepting this additional business will result in a net

c$.$ What is the minimum price per unit that would produce a positive contribution margin? Round your answer to two decimal

places.

$