| Reject Order (Alternative 1) | Accept Order (Alternative 2) | Differential Effect on Income (Alternative 2) — Product normally sold for 120 per unit special price 112 offered the

Product AA is normally sold for $120 per unit. A special price of $112 is offered for the export market. The variable production cost is $80 per unit. An additional export tariff of 30% of revenue must be paid for all export products. Assume that there is sufficient capacity for the special order. Prepare a differential analysis dated March 5 on whether to reject (Alternative 1) or accept (Alternative 2) the special order.

SOLUTION