# Accept business at special price Product AA is normally sold for $120 per unit. A special price of$112 is offered for the export market. The variable production cost is $80 per unit. An additional export tariff of 30% of revenue must he paid tor all export products. Assume that there is sufficient capacity for the special order. Prepare a differential analysis dated March 5 on whether to reject (Alternative 1) or accept (Alternative 2) the special order. BuyFind ### Accounting 27th Edition WARREN + 5 others Publisher: Cengage Learning, ISBN: 9781337272094 BuyFind ### Accounting 27th Edition WARREN + 5 others Publisher: Cengage Learning, ISBN: 9781337272094 #### Solutions Chapter Section Chapter 25, Problem 25.6APE Textbook Problem ## Accept business at special priceProduct AA is normally sold for$120 per unit. A special price of $112 is offered for the export market. The variable production cost is$80 per unit. An additional export tariff of 30% of revenue must he paid tor all export products. Assume that there is sufficient capacity for the special order. Prepare a differential analysis dated March 5 on whether to reject (Alternative 1) or accept (Alternative 2) the special order.

Expert Solution
To determine

Differential Analysis: Differential analysis refers to the analysis of differential revenue that could be gained or differential cost that could be incurred from the available alternative options of business.

To Prepare: The differential analysis to decide whether to reject or accept the special order.

### Explanation of Solution

A company has two alternatives either to reject an order or to accept an order to sell the Product AA at a special price of $112 per unit. The variable cost in production comes around$80per unit and export charges come up to 30% of selling price, $33.60 per unit. It clearly shows a loss of$1.60 per unit if the order is accepted; hence the order should be rejected.

Working Note:

Calculate the export tariff per unit for Product AA...

### Want to see the full answer?

Check out a sample textbook solution.See solution

### Want to see this answer and more?

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

See solution
Â© 2020 bartleby. All Rights Reserved.