Problem $2$

Boniatillo Corporation, which produces one product, had the following income statement for a recent

month:

Boniatillo Corporation

Income Statement

For the Month of March

There were no beginning or ending inventories of work$-$in$-$process or finished goods. Boniatillo's

manufacturing costs were as follows:

Selling and administrative expenses are all fixed.

Boniatillo has just received a special order from a firm in China to purchase $900$ units at $$20$ each. The

order will not affect the selling price to regular customers.

REQUIRED:

Discuss the Tactical Decision$-$ Making Model.

Prepare a differential analysis of the relevant costs and revenues associated with the decision to

accept or reject the special order, assuming Boniatillo has excess capacity.

Determine the net advantage or disadvantage $($profit increase or decrease$)$ of accepting the

order, assuming Boniatillo does not have excess capacity.