Alpine produces a single product. The company's March 2018 income statement is as follows:
There were no beginning or ending inventories of work-in-process or finished goods. Alpine's full manufacturing costs were as follows:
Selling and administrative expenses are all fixed. Alpine just received a special order from a firm in Canada to purchase 450 units at $55 each. The order will not affect the selling price to regular customers.
Required:
a. Prepare a differential analysis of the relevant costs and revenues associated with the decision to accept or reject the special order, assuming Regal has excess capacity.
b. Determine the net advantage or disadvantage (profit increase or decrease) of accepting the order, assuming Regal does not have excess capacity.

Question

Alpine produces a single product. The company's March 2018 income statement is as follows:
  There were no beginning or ending inventories of work-in-process or finished goods. Alpine's full manufacturing costs were as follows:
  Selling and administrative expenses are all fixed. Alpine just received a special order from a firm in Canada to purchase 450 units at $55 each. The order will not affect the selling price to regular customers.
Required:
a. Prepare a differential analysis of the relevant costs and revenues associated with the decision to accept or reject the special order, assuming Regal has excess capacity.
b. Determine the net advantage or disadvantage (profit increase or decrease) of accepting the order, assuming Regal does not have excess capacity.

Quizplus · Accepted Answer

The Answer of Alpine produces a single product. The company's March 2018 income statement is as follows:
  There were no beginning or ending inventories of work-in-process or finished goods. Alpine's full manufacturing costs were as follows:
  Selling and administrative expenses are all fixed. Alpine just received a special order from a firm in Canada to purchase 450 units at $55 each. The order will not affect the selling price to regular customers.
Required:
a. Prepare a differential analysis of the relevant costs and revenues associated with the decision to accept or reject the special order, assuming Regal has excess capacity.
b. Determine the net advantage or disadvantage (profit increase or decrease) of accepting the order, assuming Regal does not have excess capacity.

Alpine Produces a Single Product