Decision on Accepting Additional Business Country Jeans Co. has an annual plant capacity of 64,300 units, and current production is 43,900 units. Monthly fixed costs are $39,900, and variable costs are $25 per unit. The present selling price is $32 per unit. On November 12 of the current year, the company received an offer from Miller Company for 14,700 units of the product $29 each. Miller 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 prio or quantity of sales of Country Jeans Co. The area of accounting concerned with the effect of alternative courses of action on revenues and costs. a. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Miller 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. Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) November 12 Differential Reject Order Аcсept Effect Order on Income (Alternative 1) (Alternative 2) (Alternative 2) Revenues Costs: Variable manufacturing costs Income (Loss) b. Having unused capacity available is to this decision. The differential revenue is than the differential cost. Thus, acceptin 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.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 13E

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Transcribed Image Text:Decision on Accepting Additional Business Country Jeans Co. has an annual plant capacity of 64,300 units, and current production is 43,900 units. Monthly fixed costs are $39,900, and variable costs are $25 per unit. The present selling price is $32 per unit. On November 12 of the current year, the company received an offer from Miller Company for 14,700 units of the product at $29 each. Miller 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 Country Jeans Co. The area of accounting concerned with the effect of alternative courses of action on revenues and costs. a. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Miller 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. Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) November 12 Differential Reject Аcсept Effect Order Order on Income (Alternative 1) (Alternative 2) (Alternative 2) Revenues Costs: Variable manufacturing costs Income (Loss) 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. $4

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