Answer:
The company should accept the offer as it increases the sales revenue by
$ 180,000
Explanation:
Homestead Jeans Co
Differential analysis
November 12
Reject Accept Differential Effects
(Alternative 1) (Alternative 2) (Alternative 2)
Sales Units 45000 63000
(18,000+ 45,000)
<u>Sales Price Peer Unit 42 42 </u>
Sales Revenue 1890,000 2646,000 756,000
Variable Costs 1305,000 1881,000 (-576,000)
576,000+ 1305,000
<u>Fixed Costs 54,000 54,000 0 </u>
Gross Profit 531,000 711,000 180,000
The company should accept the offer as it increases the sales revenue by
$ 180,000