Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Decision on Accepting Additional Business Homestead Jeans Co. has an annual plant capacity of 66,300 units, and current production is 43,400 units. Monthly fixed costs

image text in transcribed
image text in transcribed
Decision on Accepting Additional Business Homestead Jeans Co. has an annual plant capacity of 66,300 units, and current production is 43,400 units. Monthly fixed costs are 540,700 and variable costs are $25 per unit. The present selling price is $33 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 13,000 units of the product at $28 each. Dawkins Company will market the units in a foreign country under it 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". 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) November 12 Reject Order (Alternative 1) Accept Order (Alternative 2) Differential Effect on Income (Alternative 2) Revenues Costs: Variable manufacturing costs Income (Loss) than the b. Having unused capacity available is to this decision. The differential revenue is differential cost. Thus, accepting this additional business will result in a net Previous Next b. Having unused capacity available is to this decision. The differential revenue is differential cost. Thus, accepting this additional business will result in a net than the c. What is the minimum price per unit that would produce a positive contribution margin? Round your answer to two decimal places

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Customer Satisfaction Audit

Authors: Abram I Bluestein, Michael Moriarty, Ronald J Sanderson

1st Edition

190243398X, 978-1902433981

More Books

Students also viewed these Accounting questions

Question

Connect with your audience

Answered: 1 week ago