Diamond Boot Factory normally sells their specialty boots for $375 a pair. An offer to buy 100 boots for $275 per pair was made by an organization hosting a national event in Norfolk. The variable cost per boot is $250 and special stitching will add another $20 per pair to the cost.

Determine the differential income or loss per pair of boots from selling to the organization.

Question

Business

Akira Copeland

22 May, 10:38

Diamond Boot Factory normally sells their specialty boots for $375 a pair. An offer to buy 100 boots for $275 per pair was made by an organization hosting a national event in Norfolk. The variable cost per boot is $250 and special stitching will add another $20 per pair to the cost.

Determine the differential income or loss per pair of boots from selling to the organization.

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Answers (1)

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Axel Wilkinson · Answer 1

incremental income of $ 500 will result from the special offer.

Explanation:

Consider the incremental costs and revenues resulting from accepting the special offer.

Sales (100*$275) 27,500

Variable cost (100*$250) (25,000)

Special Stitching (100*$20) (2,000)

Net Income/Loss 500

Therefore an incremental income of $ 500 will result from the special offer.