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Jacoby Company received an offer from an exporter for 26,400 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: $23 Domestic unit sales price Unit manufacturing costs:

Jacoby Company received an offer from an exporter for 26,400 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: $23 Domestic unit sales price Unit manufacturing costs:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question 54
**Differential Revenue Analysis of Jacoby Company's Export Offer** Jacoby Company received an offer from an exporter to purchase 26,400 units of its product at a price of $18 per unit. This transaction will not impact the normal production or domestic sales prices. The following data have been provided for context: - **Domestic unit sales price:** $23 **Unit Manufacturing Costs:** - **Variable Costs:** $10 - **Fixed Costs:** $3 **Question:** What is the differential revenue from the acceptance of the offer? **Answer Choices:** - a. $132,000 - b. $1,082,400 - c. $607,200 - d. $475,200 **Detailed Explanation:** 1. **Calculation of Revenue from Export Offer:** - Offer price per unit: $18 - Number of units in the offer: 26,400 - Total revenue from the offer: $18 * 26,400 = $475,200 2. **Calculation of Relevant Costs:** - Since fixed costs will remain unchanged, only the variable costs will impact the decision. - Variable cost per unit: $10 - Total variable cost for 26,400 units: $10 * 26,400 = $264,000 3. **Differential Revenue Calculation:** - Differential revenue (additional revenue from the offer) = Total revenue from the offer - Total variable costs - Differential revenue = $475,200 - $264,000 = $211,200 Therefore, after evaluating the given options, there appears to be no matching correct answer. The computed differential revenue is $211,200, which is not listed among the options provided.
Transcribed Image Text:**Differential Revenue Analysis of Jacoby Company's Export Offer** Jacoby Company received an offer from an exporter to purchase 26,400 units of its product at a price of $18 per unit. This transaction will not impact the normal production or domestic sales prices. The following data have been provided for context: - **Domestic unit sales price:** $23 **Unit Manufacturing Costs:** - **Variable Costs:** $10 - **Fixed Costs:** $3 **Question:** What is the differential revenue from the acceptance of the offer? **Answer Choices:** - a. $132,000 - b. $1,082,400 - c. $607,200 - d. $475,200 **Detailed Explanation:** 1. **Calculation of Revenue from Export Offer:** - Offer price per unit: $18 - Number of units in the offer: 26,400 - Total revenue from the offer: $18 * 26,400 = $475,200 2. **Calculation of Relevant Costs:** - Since fixed costs will remain unchanged, only the variable costs will impact the decision. - Variable cost per unit: $10 - Total variable cost for 26,400 units: $10 * 26,400 = $264,000 3. **Differential Revenue Calculation:** - Differential revenue (additional revenue from the offer) = Total revenue from the offer - Total variable costs - Differential revenue = $475,200 - $264,000 = $211,200 Therefore, after evaluating the given options, there appears to be no matching correct answer. The computed differential revenue is $211,200, which is not listed among the options provided.
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