Answer :
To determine the differential income or loss per pair of boots from selling to the organization, we need to calculate the cost per pair and compare it to the selling price per pair.
The variable cost per boot is given as $10, and the additional cost for special stitching is $3 per pair. So, the total cost per pair of boots is $10 + $3 = $13. The organization is offering to buy 75 boots at $20 per pair. Therefore, the total revenue from selling to the organization would be 75 x $20 = $1500.
To calculate the differential income or loss per pair of boots, we subtract the total cost per pair from the selling price per pair. In this case, it would be $20 - $13 = $7. Therefore, the differential income per pair of boots from selling to the organization would be $7.
To determine whether Diamond Boot Factory should accept or reject the special offer, we need to consider the differential income per pair of boots. Since the differential income per pair of boots is positive ($7), it indicates that selling to the organization at the special offer price would result in additional income for Diamond Boot Factory.
In conclusion, Diamond Boot Factory should accept the special offer from the organization hosting the national event in Norfolk, as it would result in a positive differential income of $7 per pair of boots.
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