Answer :
Final answer:
The differential income or loss per pair of boots from selling to the organization can be determined by subtracting the variable cost and special stitching cost from the selling price. Diamond Boot Factory should accept the special offer, as they will make a differential income of $19 per pair of boots.
Explanation:
The differential income or loss per pair of boots from selling to the organization can be determined by subtracting the variable cost and special stitching cost from the selling price.
Differential income/loss per pair of boots = Selling price per pair - Variable cost per pair - Cost of special stitching per pair
So, in this case, the differential income or loss per pair of boots from selling to the organization is:
$33 - $13 - $1 = $19
Therefore, Diamond Boot Factory should accept the special offer, as they will make a differential income of $19 per pair of boots.
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