Burns Industries currently manufactures and sells 18,000 power saws per month, although it has the capacity to produce 33,000 units per month. At the 18,000-unit-per-month level of production, the per-unit cost is $61, consisting of $38 in variable costs and $23 in fixed costs. Burns sells its saws to retail stores for $78 each. Allen Distributors has offered to purchase 4,800 saws per month at a reduced price. Burns can manufacture these additional units with no change in its present level of f

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Burns Industries currently manufactures and sells 18,000 power saws per month, although it has the capacity to produce 33,000 units per month. At the 18,000-unit-per-month level of production, the per-unit cost is $61, consisting of $38 in variable costs and $23 in fixed costs. Burns sells its saws to retail stores for $78 each. Allen Distributors has offered to purchase 4,800 saws per month at a reduced price. Burns can manufacture these additional units with no change in its present level of fixed manufacturing costs. Using an incremental analysis approach, Burns should consider accepting this special order only if the price per unit offered by Allen is at least:

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Answer:Burns IndustriesUsing an incremental analysis approach, Burns should consider accepting this special order only if the price per unit offered by Allen is at least:above $38 (the variable cost per unit).Explanation:a) Data and Calculations:Monthly production and sales units = 18,000Production capacity per month = 33,000 unitsCosts at the 18,000-unit-per-month level of production:Variable costs = $38Fixed costs =        23Total per unit =  $61Selling price per unit = $78Special offer for 4,800 saws per month, without changing the fixed manufacturing costs.b) Incremental analysis approach is a management decision technique that specifies that only relevant, marginal, or differential costs should be taken into account.  It rules out the inclusion of sunk or fixed costs, which do not change between alternatives.

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