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Answer :
Variable cost per unit = $11 per pair.Additional cost per unit = $1 per pair.Total cost per unit = $11 + $1 = $12 per pair. Therefore, Differential income per pair of boots = $23 - $12 = $11 per pair.Therefore, Diamond Boot Factory should accept the special offer because the differential income per pair of boots is $11, which is greater than the original price of $6 per pair.
The Diamond Boot Factory is a company that specializes in the production of custom-made boots. The factory typically charges $28 per pair of boots and incurs a variable cost of $11 per pair of boots. In addition, there is an additional $1 cost per pair of boots for special stitching.
The differential income per pair of boots from selling to the organization will be calculated by taking the difference between the revenue per unit and the cost per unit of production. As a result, the differential income per pair of boots is calculated as follows:Revenue per unit = $23 per pair.
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