Stryker Industries received an offer from an exporter for 15,000 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: Domestic unit sales price $20; Unit manufacturing costs: Variable 11; Fixed 1. What is the differential cost from the acceptance of the offer? A. $85,500 B. $200,000 C. $262,500 D. $165,000

To calculate the differential cost, we first need to understand what it is. Differential cost is the difference in cost that results from choosing one alternative over another. In this case, the alternatives are selling domestically or exporting.

1. Calculate the total revenue from exporting: The exporter is offering $17.50 per unit for 15,000 units. So, the total revenue from exporting would be 15,000 units *$17.50/unit = $262,500.

2. Calculate the total revenue from domestic sales: If Stryker Industries did not accept the offer, they could sell the units domestically for $20 per unit. So, the total revenue from domestic sales would be 15,000 units *$20/unit = $300,000.

3. Calculate the differential revenue: The differential revenue is the difference in revenue from the two alternatives. So, the differential revenue would be $300,000 (domestic sales) -$262,500 (export sales) = $37,500.

4. Calculate the total cost of manufacturing for the units: The total cost of manufacturing per unit is the sum of the variable and fixed costs, which is $11 +$1 = $12. For 15,000 units, the total cost would be 15,000 units *$12/unit = $180,000.

5. Calculate the differential cost: The differential cost is the difference in cost from the two alternatives. In this case, the cost of manufacturing is the same for both alternatives, so the differential cost is the difference in revenue, which is $37,500.

So, the differential cost from the acceptance of the offer is $37,500. However, this option is not available in the choices provided. It seems there might be a mistake in the question or the provided choices.

To calculate the differential cost, we first need to understand what it is. Differential cost is the difference in cost that results from selecting one alternative over another. In this case, the alternatives are selling domestically or exporting.

Step 1: Calculate the total revenue from exporting The exporter is offering $17.50 per unit for 15,000 units. So, the total revenue from exporting would be 15,000 units *$17.50/unit = $262,500.

Step 2: Calculate the total revenue from domestic sales If Stryker Industries did not accept the offer, they could sell the units domestically for $20 per unit. So, the total revenue from domestic sales would be 15,000 units *$20/unit = $300,000.

Step 3: Calculate the differential revenue The differential revenue is the difference in revenue from the two alternatives. So, the differential revenue would be $300,000 (domestic sales) -$262,500 (export sales) = $37,500.

Step 4: Calculate the total cost of manufacturing for export The unit manufacturing cost for export is the variable cost ($11) plus the fixed cost ($1), which totals to $12 per unit. So, the total cost of manufacturing for export would be 15,000 units *$12/unit = $180,000.

Step 5: Calculate the differential cost The differential cost is the difference in cost from the two alternatives. Since the cost of manufacturing is the same for both alternatives, the differential cost is the difference in revenue, which is $37,500.

So, none of the options A, B, C, D is correct. The correct answer is $37,500.