Diamond Boot factory normally sells their specialty boots for $375 a pair. An offer to buy 100 boots for $275 per pair was made by an organization hosting a national event in
Norfolk. Variable cost per boot is $250 and special stitching will add another $20 per pair to the cost.
Determine the differential income or loss per pair of boots from selling to the organization.
Amount ($) | Amount ($) | |
---|---|---|
Differential revenue per pair of boots | 275 | |
Differential costs per pair of boots: | ||
Variable manufacturing costs | 250 | |
Variable cost for special stitching | 20 | 270 |
Differential income per pair of boots | $5 |
Diamond Boot factory normally sells their specialty boots for $375 a pair. An offer to buy...
Alert company sells a high quality watch at $750 per unit to specialty stores that provide various watches and auxiliary products. Alert Company is manufacturing and selling 25,000 units of its high quality watch a year using only 80% capacity. The variable cost is $500 per watch and the annual fixed cost is $2,000,000. If Alert Company would reduce its capacity size to the current production level, it could save 15% of the fixed costs. Alert Company was recently contacted...
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