Down Home Jeans Co. has an annual plant capacity of 63,100 units, and current production is 46,000 units. Monthly fixed costs are $40,300, and variable costs are $25 per unit. The present selling price is $32 per unit. On February 2, 2014, the company received an offer from Fields Company for 15,800 units of the product at $29 each. Fields 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 Down Home Jeans Co.
a. Prepare a differential analysis on whether to reject (Alternative 1) or accept (Alternative 2) the Fields order. If an amount is zero, enter zero "0".
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Reject Order (alt 1) |
Accept order (alt 2) |
differential analysis |
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| variable manufacturing costs |
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| income (loss) |
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What is the minimum price per unit that would produce a positive contribution margin? Round your answer to two decimal places.