Decision on Accepting Additional Business Down Home Jeans Co. has an annual plant capacity of 63,500 units, and current production is 43,600 units. Monthly fixed costs are $41,100, and variable costs are $25 per unit. The present selling price is $35 per unit. On November 12 of the current year, the company received an offer from Fields Company for 14,300 units of the product at $27 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. Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) November 12 Differential Effect Reject Order (Alternative 1) (Alternative 2) Accept Order on Income (Alternative 2) Revenues Costs: Variable manufacturing costs Income (Loss) to this decision. The differential revenue is than the differential cost. Thus, accepting this b. Having unused capacity available is additional business will result in a net relevant ce a positive contribution margin? Round your answer to two decimal places. c. What is the minimum price per unit that irrelevant

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 Down Home Jeans Co. has an annual plant capacity of 63,500 units, and current production is 43,600 units. Monthly fixed costs are $41,100, and variable costs are $25 per unit. The present selling price is $35 per unit. On November 12 of the current year, the company received an offer from Fields Company for 14,300 units of the product at $27 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. Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) November 12 Differential Effect Reject Order (Alternative 1) (Alternative 2) Accept Order on Income (Alternative 2) Revenues Costs: Variable manufacturing costs Income (Loss) to this decision. The differential revenue is than the differential cost. Thus, accepting this b. Having unused capacity available is additional business will result in a net relevant ce a positive contribution margin? Round your answer to two decimal places. c. What is the minimum price per unit that irrelevant

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