Accounting
27th Edition
ISBN: 9781337272094
Author: WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher: Cengage Learning,
expand_more
expand_more
format_list_bulleted
Question
Chapter 25, Problem 25.6BPE
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.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Accept Business at Special Price
Product A is normally sold for $50 per unit. A special price of $32 is offered for the export market. The variable production cost is $24 per unit. An additional export tariff of 13% of revenue must be paid for all export products. Assume there is sufficient capacity for the special order.
a. Prepare a differential analysis dated March 16 on whether to reject (Alternative 1) or accept (Alternative 2) the special order. If required, round your answers to two decimal places. If an amount is zero, enter "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)
March 16
Reject Order (Alternative 1)
Accept Order (Alternative 2)
Differential Effect on Income (Alternative 2)
Revenues, per unit
$fill in the blank 3f481bf3bf97fe8_1
$fill in the blank 3f481bf3bf97fe8_2
$fill in the blank 3f481bf3bf97fe8_3
Costs:
Variable…
Accept Business at Special Price
Product A is normally sold for $9.60 per unit. A special price of $7.20 is offered for the export market. The variable production cost is $5.00 per unit. An additional export tariff of 15% of revenue must be paid for all export products. Assume there is sufficient capacity for the special order.
a. Prepare a differential analysis dated March 16 on whether to reject (Alternative 1) or accept (Alternative 2) the special order. Round your answers to two decimal places. If an amount is zero, enter "0".
Differential Analysis
Reject Order (Alt. 1) or Accept Order (Alt. 2)
March 16
RejectOrder(Alternative 1)
AcceptOrder(Alternative 2)
DifferentialEffects(Alternative 2)
Revenues, per unit
Costs:
Variable manufacturing costs, per unit
Export tariff, per unit
Profit (loss), per unit
b. Should the special order be rejected (Alternative 1) or accepted (Alternative 2)?
Accept Business at Special Price
Product N is normally sold for $42 per unit. A special price of $33 is offered for the export market. The variable production cost is $23 per unit. An additional export tariff of 16% of revenue must be paid for all export products. Assume that there is sufficient capacity for the special order.
Prepare a differential analysis dated March 16 on whether to Reject Order (Alternative 1) or Accept Order (Alternative 2). If required, round your answers to two decimal places. If an amount is zero, enter "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)
March 16
RejectOrder(Alternative 1)
AcceptOrder(Alternative 2)
DifferentialEffects(Alternative 2)
Revenues, per unit
$fill in the blank
$fill in the blank
$fill in the blank
Costs:
Variable manufacturing costs, per unit
fill in the blank
fill in the blank
fill in the blank…
Chapter 25 Solutions
Accounting
Ch. 25 - Explain the meaning of (a) differential revenue,...Ch. 25 - A company could sell a building for 250,000 or...Ch. 25 - A chemical company has commodity-grade and...Ch. 25 - A company accepts incremental business at a...Ch. 25 - A company fabricates a component at a cost of...Ch. 25 - Prob. 6DQCh. 25 - In the long run, the normal selling price must be...Ch. 25 - Although the cost-plus approach to product pricing...Ch. 25 - How does the target cost concept differ from...Ch. 25 - Prob. 10DQ
Ch. 25 - Under what conditions might a company use...Ch. 25 - Lease or sell Duncan Company owns a machine with a...Ch. 25 - Lease or sell Timberlake Company owns equipment...Ch. 25 - Prob. 25.2APECh. 25 - Discontinue a segment Product B has revenue of...Ch. 25 - Make or buy A restaurant bakes its own bread for a...Ch. 25 - Make or buy A company manufactures various sized...Ch. 25 - Replace equipment A machine with a book value of...Ch. 25 - Replace equipment A machine with a book value of...Ch. 25 - Prob. 25.5APECh. 25 - Process or sell Product D is produced for 24 per...Ch. 25 - Accept business at special price Product AA is...Ch. 25 - Prob. 25.6BPECh. 25 - Product cost markup percentage Light force Inc....Ch. 25 - Product cost markup percentage Green Thumb Garden...Ch. 25 - Bottleneck profit Product A has a unit...Ch. 25 - Prob. 25.8BPECh. 25 - Activity-based costing Mainline Marine Company has...Ch. 25 - Activity-based costing Casual Cuts Inc. has total...Ch. 25 - Differential analysis for a lease-or-sell decision...Ch. 25 - Prob. 25.2EXCh. 25 - Prob. 25.3EXCh. 25 - Differential analysis for a discontinued product...Ch. 25 - Segment analysis for a service company Charles...Ch. 25 - Decision to discontinue a product On the basis of...Ch. 25 - Make or buy decision Diamond Computer Company has...Ch. 25 - Make-or-buy decision for a service company The...Ch. 25 - Machine replacement decision A company is...Ch. 25 - Differential analysis for machine replacement Kim...Ch. 25 - Sell or process further Big Fork Lumber Company...Ch. 25 - Prob. 25.12EXCh. 25 - Decision on accepting additional business...Ch. 25 - Accepting business at a special price Portable...Ch. 25 - Prob. 25.15EXCh. 25 - Accepting business at a special price for a...Ch. 25 - Product cost concept of product pricing La Femme...Ch. 25 - Product cost concept of product costing Smart...Ch. 25 - Target costing Toyota Motor Corporation uses...Ch. 25 - Target costing Instant Image Inc. manufactures...Ch. 25 - Product decisions under bottlenecked operations...Ch. 25 - Product decisions under bottlenecked operations...Ch. 25 - Activity-based costing CardioTrainer Equipment...Ch. 25 - Activity-based costing Zeus Industries...Ch. 25 - Activity rates and product costs using...Ch. 25 - Total cost concept of product pricing Based on the...Ch. 25 - Variable cost concept of product pricing Based on...Ch. 25 - Differential analysis involving opportunity costs...Ch. 25 - Differential analysis for machine replacement...Ch. 25 - Differential analysis for sales promotion proposal...Ch. 25 - Prob. 25.4APRCh. 25 - Prob. 25.5APRCh. 25 - Prob. 25.6APRCh. 25 - Activity-based costing Pure Cane Sugar Company...Ch. 25 - Prob. 25.1BPRCh. 25 - Differential analysis for machine replacement...Ch. 25 - Differential analysis for sales promotion proposal...Ch. 25 - Differential analysis for further processing The...Ch. 25 - Prob. 25.5BPRCh. 25 - Product pricing and profit analysis with...Ch. 25 - Activity-based costing Southeastern Paper Company...Ch. 25 - Ethics in Action Aaron McKinney is a cost...Ch. 25 - Communication The following conversation took...Ch. 25 - Decision on accepting additional business A...Ch. 25 - Accept business at a special price for a service...Ch. 25 - Identifying product cost distortion Peachtree...
Knowledge Booster
Similar questions
- Product MM is normally sold for $410 per unit. A special price of $380 is offered for the export market. The variable production cost is $270 per unit. An additional export tariff of 30% of revenue must be paid for all export products. Assume that there is sufficient capacity for the special order. Prepare a differential analysis dated March 5 on whether to Reject Order (Alternative 1) or Accept Order (Alternative 2).arrow_forwardProduct R is normally sold for $45 per unit. A special price of $32 is offered for the export market. The variable production cost is $26 per unit. An additional export tariff of 15% of revenue must be paid for all export products. Assume that there is sufficient capacity for the special order. Prepare a differential analysis dated March 16, on whether to reject (Alternative 1) or accept (Alternative 2) the special order. If required, round your answers to two decimal places. If an amount is zero, enter "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) March 16 Reject Order(Alternative 1) Accept Order(Alternative 2) Differential Effecton Income(Alternative 2) Revenues, per unit $fill in the blank 722a4ffa8fe5ff6_1 $fill in the blank 722a4ffa8fe5ff6_2 $fill in the blank 722a4ffa8fe5ff6_3 Costs: Variable manufacturing costs, per unit fill in the…arrow_forwardJacoby Company received an offer from an exporter for 25,100 units of product at $18 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $21 Unit manufacturing costs: Variable $12 Fixed $5 What is the differential revenue from the acceptance of the offer? a.$527,100 b.$451,800 c.$75,300 d.$978,900arrow_forward
- Rylan corporation received an offer from an exporter for 25,000 units of product at $16 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data is available Domestic sales price: $22 Unit manufacturing costs: Variable: 11 Fixed: 6 A. What is the amount of income or loss from acceptance of the offer? B. What is the differential cost from acceptance of the offer?arrow_forwardStryker Industries received an offer from an exporter for 30,000 units of product at $17 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data is available: Domestic unit sales price $24 Unit manufacturing costs: Variable 12 Fixed 4 What is the differential cost from the acceptance of the offer? a.$510,000 b.$360,000 c.$720,000 d.$120,000arrow_forwardXYZ Company incurs costs of $ 30 per unit ($18 variable and $12 fixed) to make a product that normally sells for $42. A foreign wholesaler offers to buy 6,000 units at $26 each. The special order results in additional shipping costs of $1 per unit. Calculate the increase or decrease in net income the company realizes by accepting the special order, assuming they have excess operating capacity. Should the Company accept the special order? Select one: a. XYZ should reject the special offer to avoid 42,000 loss. b. XYZ should accept the offer to gain 24,000 net income. c. XYZ should accept the offer to gain 42,000 net income. d. XYZ should reject the special offer to avoid 24,000 loss.arrow_forward
- Use this information for Stryker Industries to answer the question that follow. Stryker Industries received an offer from an exporter for 29,000 units of product at $18 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $22 Unit manufacturing costs: Variable 11 Fixed 3 What is the differential cost from the acceptance of the offer? a.$87,000 b.$522,000 c.$319,000 d.$638,000arrow_forwardA business received an offer from an exporter for 10,000 units of product at a special price of $15.50 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $21 Unit manufacturing costs: Variable 12 Fixed 5 What is the amount of the gain or loss from acceptance of the offer? a. $8,000 loss b. $15,000 loss c. $35,000 gain d. $30,000 gainarrow_forwardUse this information for Stryker Industries to answer the question that follow.Stryker Industries received an offer from an exporter for 15,000 units of product at $17.50 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $20 Unit manufacturing costs: Variable 11 Fixed 1 What is the amount of income or loss from the acceptance of the offer?arrow_forward
- Use this information for Stryker Industries to answer the question that follow. Stryker Industries received an offer from an exporter for 28,000 units of product at $19 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $21 Unit manufacturing costs: Variable 10 Fixed 6 What is the amount of income or loss from the acceptance of the offer? a.$588,000 loss b.$532,000 income c.$252,000 income d.$280,000 lossarrow_forwardMaize Company incurs a cost of $35 per unit, of which $20 is variable, to make a product that normally sells for $58. A foreign wholesaler offers to buy 6,000 units at $30 each. Maize will incur additional costs of $4 per unit to imprint a logo and to pay for shipping. Compute the increase or decrease in net income Maize will realize by accepting the special order, assuming Maize has suffi cient excess operating capacity. Should Maize Company accept the special order?arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub