Decision on Accepting Additional Business

Homestead Jeans Co. has an annual plant capacity of 66,000 units, and current production is 44,000 units. Monthly fixed costs are $41,700, and variable costs are $25 per unit. The present selling price is $37 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 15,900 units of the product at $27 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". 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	$fill in the blank 768291ff5f8bfae_1	$fill in the blank 768291ff5f8bfae_2	$fill in the blank 768291ff5f8bfae_3
Costs:
Variable manufacturing costs	fill in the blank 768291ff5f8bfae_4	fill in the blank 768291ff5f8bfae_5	fill in the blank 768291ff5f8bfae_6
Income (Loss)	$fill in the blank 768291ff5f8bfae_7	$fill in the blank 768291ff5f8bfae_8	$fill in the blank 768291ff5f8bfae_9

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. $fill in the blank 9d62c802b03a04b_4