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

question 21

Essay

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.

Identify cases where government intervention in monopolies raises or lowers social welfare.

Analyze the rationale behind public ownership of monopolies and its effects on market efficiency and social welfare.

Understand the basic principles of a perfectly competitive market.

Analyze the relationship between marginal revenue, average revenue, and total revenue in competitive markets.

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Definitions:

Acetal

An acetal is a functional group characterized by two ether-like oxygen atoms bonded to the same carbon atom, commonly formed from the reaction of an aldehyde and an alcohol.

Acetal

A carbon atom connected to an alkyl group, two -OR groups, and a hydrogen atom, typically formed from the reaction between an aldehyde and alcohol.

Ylide

A compound with opposite charges on adjacent atoms, typically consisting of a positively charged heteroatom adjacent to a negatively charged carbon.

Cyclohexanone Oxime

An organic compound resulting from the reaction of cyclohexanone with hydroxylamine, often used as an intermediate in the synthesis of caprolactam.