Down Home Jeans Co. has an annual plant capacity of 63,800 units, and current production is 45,300 units. Monthly fixed costs are $40,700, and variable costs are $25 per unit. The present selling price is $36 per unit. On November 12 of the current year, the company received an offer from Fields Company for 14,500 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.

a. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Fields order. If an amount is zero, enter zero "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign.

	Reject Order (Alternative 1)	Accept Order (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues	$fill in the blank f53c14f2801bfa1_1	$fill in the blank f53c14f2801bfa1_2	$fill in the blank f53c14f2801bfa1_3
Costs:
Variable manufacturing costs	fill in the blank f53c14f2801bfa1_4	fill in the blank f53c14f2801bfa1_5	fill in the blank f53c14f2801bfa1_6
Income (Loss)	$fill in the blank f53c14f2801bfa1_7	$fill in the blank f53c14f2801bfa1_8	$fill in the blank f53c14f2801bfa1_9

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a. Subtract the additional costs from the additional revenues for accepting the order.

b. Having unused capacity available is

relevantirrelevantrelevant

to this decision. The differential revenue is

morelessmore

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

gainlossgain

.

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 c5efea00afb3ff8_4