Question

Diamond Boot Factory normally sells their specialty boots for $26 a pair. An offer to buy 70 boots for $18 per pair was made by an organization hosting a national event in Norfolk. The variable cost per boot is $9 and special stitching will add another $2 per pair to the cost. Determine the differential income or loss per pair of boots from selling to the organization. Enter the amount as a positive number. Differential per pair of boots from accepting the special order is $fill in the blank 2 .

Answer 1

Answer:

Diamond Boot Factory

Differential income per pair of boots from accepting the special order is:

= $7.00.

Explanation:

a) Data and Calculations:

Selling price of specialty boots = $26 a pair

Variable cost per boot = $9

Special offer for 70 boots at $18 per pair

Additional stitching cost = $2

Total variable cost for the special order = $11 ($9 + $2)

Revenue from the special order = $1,260 ($18 * 70)

Variable cost for the special order    770 ($11 * 70)

Differential income =                       $490 ($7 * 70)