Question

Stryker Industries received an offer from an exporter for 15,000 units of product at $17.50 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data is available:
Domestic unit sales price $20
Unit manufacturing costs: Variable 11, Fixed 1
What is the differential cost from the acceptance of the offer?

a. $165,000
b. $85,500
c. $262,500
d. $200,000

Answer 1

Answer:

differential cost of the offer = $165000

so correct option is a. $165,000

Explanation:

given data

exporter = 15,000 units

product cost = $17.50 per unit

Domestic unit sales price = $20

manufacturing costs Variable = 11

manufacturing costs Fixed = 1

to find out

differential cost from the acceptance of the offer

solution

we get here differential cost from the acceptance of the offer that is

differential cost of the offer = variable cost per unit × number of units exposed   ......................1

put here value we get

differential cost of the offer = 11 ×  15,000

differential cost of the offer = $165000

so correct option is a. $165,000