Decision on Accepting Additional Business Country Jeans Co. has an annual plant capacity of 63,000 units, and current production is 46,800 units. Monthly fixed costs are $41,900, and variable costs are $25 per unit. The present selling price is $32 per unit. On February 2 the company received an offer from Miller Company for 14,300 units of the product at $29 each. Miller 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 Country Jeans Co. a. Prepare a differential analysis dated February 2 on whether to reject (Alternative 1) or accept (Alternative 2) the Miller order. If an amount is zero, enter zero "0".
Reject order (Alternative 1) Accept Order (Alternative 2) Differential Effect on Income (Alternative 2)
Revenues ________ ________ ________
Costs ________ ________ ________
Variable Man costs ________ _________ _________
Income Loss