Jacoby Company Received an Offer from an Exporter for 30,000

question 39

Multiple Choice

Jacoby Company received an offer from an exporter for 30,000 units of product at $15 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available:Domestic unit sales price$21Unit manufacturing costs:Variable12Fixed5​​What is the differential revenue from the acceptance of the offer?

• A) $450,000
• B) $630,000
• C) $510,000
• D) $120,000

---

Definitions:

Negotiated Price Approach

An approach to transfer pricing that allows managers of decentralized units to agree (negotiate) among themselves as to the transfer price.

Transfer Price

The price at which goods and services are sold between divisions within the same company.

Responsibility Centers

Units or departments within an organization, each accountable for its own activities and financial results.

Investment Center

An investment center is a business unit within an organization that has control over its revenues, expenses, and investments, and is evaluated based on its return on investment.