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Diamond Boot Factory normally sells its specialty boots for $33 a pair. An offer to buy 75 boots for $26 per pair was made by an organization hosting a national event in Norfolk. The variable cost per boot is $13, and special stitching will add another $1 per pair to the cost.

Determine the differential income or loss per pair of boots from selling to the organization. Should Diamond Boot Factory accept or reject the special offer?

Answer :

Final answer:

The differential income or loss per pair of boots from selling to the organization can be determined by subtracting the variable cost and special stitching cost from the selling price. Diamond Boot Factory should accept the special offer, as they will make a differential income of $19 per pair of boots.

Explanation:

The differential income or loss per pair of boots from selling to the organization can be determined by subtracting the variable cost and special stitching cost from the selling price.

Differential income/loss per pair of boots = Selling price per pair - Variable cost per pair - Cost of special stitching per pair

So, in this case, the differential income or loss per pair of boots from selling to the organization is:

$33 - $13 - $1 = $19

Therefore, Diamond Boot Factory should accept the special offer, as they will make a differential income of $19 per pair of boots.

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