Decision on Accepting Additional Business Homestead Jeans Co. has an annual plant capacity of 63,700 units,...

 

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Decision on Accepting Additional Business Homestead Jeans Co. has an annual plant capacity of 63,700 units, and current production is 43,300 units. Monthly fixed costs are $38,900, and variable costs are $25 per unit. The present selling price is $34 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 15,500 units of the product at $26 each. Dawkins 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 Homestead Jeans Co. a. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Dawkins order. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Revenues Costs: Variable manufacturing costs Income (Loss) Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) November 12 Reject Order (Alternative 1) Accept Order (Alternative 2) b. Having unused capacity available is differential cost. Thus, accepting this additional business will result in a net Differential Effect on Income (Alternative 2) to this decision. The differential revenue is than the c. What is the minimum price per unit that would produce a positive contribution margin? Round your answer to two decimal places. $ Decision on Accepting Additional Business Homestead Jeans Co. has an annual plant capacity of 63,700 units, and current production is 43,300 units. Monthly fixed costs are $38,900, and variable costs are $25 per unit. The present selling price is $34 per unit. On November 12 of the current year, the company received an offer from Dawkins Company for 15,500 units of the product at $26 each. Dawkins 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 Homestead Jeans Co. a. Prepare a differential analysis dated November 12 on whether to reject (Alternative 1) or accept (Alternative 2) the Dawkins order. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Revenues Costs: Variable manufacturing costs Income (Loss) Differential Analysis Reject Order (Alt. 1) or Accept Order (Alt. 2) November 12 Reject Order (Alternative 1) Accept Order (Alternative 2) b. Having unused capacity available is differential cost. Thus, accepting this additional business will result in a net Differential Effect on Income (Alternative 2) to this decision. The differential revenue is than the c. What is the minimum price per unit that would produce a positive contribution margin? Round your answer to two decimal places. $

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Differential Analysis Reject Order Alt ... View the full answer