Question

Diamond Boot factory normally sells their specialty boots for $375 a pair. An offer to buy 100 boots for $275 per pair was made by an organization hosting a national event in

Norfolk. Variable cost per boot is $250 and special stitching will add another $20 per pair to the cost.

Determine the differential income or loss per pair of boots from selling to the organization.

Answer 1

	Amount ($)	Amount ($)
Differential revenue per pair of boots		275
Differential costs per pair of boots:
Variable manufacturing costs	250
Variable cost for special stitching	20	270
Differential income per pair of boots		$5