Product R is normally sold for $52 per unit. A special price of $42 is offered for the export market. The variable production cost is $30 per unit. An additional export tariff of 30% of revenue must be paid for all export products. Assume there is sufficient capacity for the special order. Prepare and show in solution a differential analysis dated October 23 on whether to reject (Alternative 1) or accept (Alternative 2) the special order.

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 6BE
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Product R is normally sold for $52 per unit. A special price of $42 is offered for the
export market. The variable production cost is $30 per unit. An additional export tariff
of 30% of revenue must be paid for all export products. Assume there is sufficient
capacity for the special order. Prepare and show in solution a differential analysis dated
October 23 on whether to reject (Alternative 1) or accept (Alternative 2) the special
order. 

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