A business received an offer from an exporter for 10,000 units of product at $17.50 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data is available: What is the differential revenue from the acceptance of the offer?
A) $200,000
B) $175,000
C) $130,000
D) $140,000

Question

A business received an offer from an exporter for 10,000 units of product at $17.50 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data is available:  What is the differential revenue from the acceptance of the offer?
A) $200,000 
B) $175,000 
C) $130,000 
D) $140,000

Quizplus · Accepted Answer

The differential revenue is calculated as the difference between the revenue generated from the acceptance of the offer and the additional costs incurred to produce and deliver the additional units.

In this case, the revenue generated would be:
10,000 units x $17.50 per unit = $175,000

Since the acceptance of the offer will not affect normal production or domestic sales prices, there would be no additional costs incurred.

Therefore, the differential revenue from the acceptance of the offer is $175,000.

A Business Received an Offer from an Exporter for 10,000