Question

Jacoby Company received an offer from an exporter for 30,000 units of product at $15 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available:
Domestic unit sales price $21
Unit manufacturing costs: Variable 12 Fixed 5
What is the differential revenue from the acceptance of the offer?
a. $630,000
b. $120,000
c. $510,000
d. $450,000

Answer 1

Answer:

The correct option here is D) $450,000.

Explanation:

The differential revenue from the acceptance offer is the additional amount of revenue that will be generated without affecting the revenue generated from the domestic sales in the normal course of operations.

The differential revenue from acceptance of offer can be calculated as -

= Selling price per unit per offer x number of units per offer

= $15 x 30,000

= $450,000

Therefore $450,000 is the differential revenue from the acceptance of offer.