27th Edition
WARREN + 5 others
ISBN: 9781337272094




27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

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 that there is sufficient, capacity for the special older. Prepare a differential analysis dated Mardi 16 on whether to reject (Alternative 1) or accept (Alternative 2) the special order.

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.


A company has two alternatives either to reject an order or to accept an order to sell the Product A at a special price of $7.20 per unit. The variable cost in production comes around $5 per unit and export charges come up to 15% of selling price, $1.08 per unit. It clearly shows a profit of $1.12 per unit if the order is accepted; hence the order should be accepted.

Working Note:

Calculate the export tariff per unit for Product A.

Export tariff  = $7

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

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

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What are the four phases in the typical business cycle?

Foundations of Business (MindTap Course List)

Suppose interest rates on residential mortgages of equal risk are 5.5% in California and 7.0% in New York. Coul...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)