Boniatillo Corporation, which produces one product, had the following income statement for a recent month:
Boniatillo Corporation Income Statement
For the Month of March 2016
There were no beginning or ending inventories of work-in-process or finished goods. Boniatillo's manufacturing
costs were as follows:
Boniatillo has just received a special order from a firm in China to purchase 900 units at $20 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 Boniatillo has excess capacity.
b. Determine the net advantage or disadvantage (profit increase or decrease) of accepting the order, assuming Boniatillo does not have excess capacity.

Question

Boniatillo Corporation, which produces one product, had the following income statement for a recent month:
Boniatillo Corporation Income Statement
For the Month of March 2016
  There were no beginning or ending inventories of work-in-process or finished goods. Boniatillo's manufacturing
costs were as follows:
  Boniatillo has just received a special order from a firm in China to purchase 900 units at $20 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 Boniatillo has excess capacity.
b. Determine the net advantage or disadvantage (profit increase or decrease) of accepting the order, assuming Boniatillo does not have excess capacity.

Quizplus · Accepted Answer

The Answer of Boniatillo Corporation, which produces one product, had the following income statement for a recent month:
Boniatillo Corporation Income Statement
For the Month of March 2016
  There were no beginning or ending inventories of work-in-process or finished goods. Boniatillo's manufacturing
costs were as follows:
  Boniatillo has just received a special order from a firm in China to purchase 900 units at $20 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 Boniatillo has excess capacity.
b. Determine the net advantage or disadvantage (profit increase or decrease) of accepting the order, assuming Boniatillo does not have excess capacity.

Boniatillo Corporation, Which Produces One Product, Had the Following Income