Homestead Jeans Co. has an annual plant capacity of 67,000 units, and current production is 45,700 units. Monthly fixed costs are $54,400, and variable costs are $31 per unit. The present selling price is $40 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 19,600 units of the product at $34 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.

Labels
Cash flows from operating activities
Costs
November 12
Amount Descriptions
Cash payments for merchandise
Cash received from customers
Income (loss)
Revenues
Variable manufacturing costs

Differential Analysis

Reject Order (Alternative 1) or Accept Order (Alternative 2)

1		Reject Order	Accept Order	Differential Effect on Income
2		(Alternative 1)	(Alternative 2)	(Alternative 2)
3
4
5
6