FDE Manufacturing Company has a normal plant capacity of 75,000 units per month. Because of an extra large quantity of inventory on hand, it expects to produce only 60,000 units in May. Monthly fixed costs and expenses are $150,000 ($2 per unit at normal plant capacity), and variable costs and expenses are $13 per unit. The present selling price is $25 per unit. The company has an opportunity to sell 5,000 additional units at $14.30 per unit to an exporter who plans t market the product under its own brand name in a foreign market. The additional business is therefore not expected to affect the regular selling price or quantity of sales of FDE Manufacturing Company. Prepare a differential analysis report, dated April 21 of the current year, on the proposal to sell at the special price. FDE Manufacturing Company Proposal to Sell to Exporter April 21, 20XX Differential revenue from accepting offer: Revenue from sale of 5,000 additional units at $14.30 - v X Differential cost of accepting offer: Variable costs and expenses of 5,000 additional units at $13 Differential income from accepting offer
FDE Manufacturing Company has a normal plant capacity of 75,000 units per month. Because of an extra large quantity of inventory on hand, it expects to produce only 60,000 units in May. Monthly fixed costs and expenses are $150,000 ($2 per unit at normal plant capacity), and variable costs and expenses are $13 per unit. The present selling price is $25 per unit. The company has an opportunity to sell 5,000 additional units at $14.30 per unit to an exporter who plans t market the product under its own brand name in a foreign market. The additional business is therefore not expected to affect the regular selling price or quantity of sales of FDE Manufacturing Company. Prepare a differential analysis report, dated April 21 of the current year, on the proposal to sell at the special price. FDE Manufacturing Company Proposal to Sell to Exporter April 21, 20XX Differential revenue from accepting offer: Revenue from sale of 5,000 additional units at $14.30 - v X Differential cost of accepting offer: Variable costs and expenses of 5,000 additional units at $13 Differential income from accepting offer
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:FDE Manufacturing Company has a normal plant capacity of 75,000 units per month. Because of an extra large quantity of inventory on hand, it expects to produce only 60,000 units in May. Monthly fixed costs and expenses are $150,000 ($2 per
unit at normal plant capacity), and variable costs and expenses are $13 per unit. The present selling price is $25 per unit. The company has an opportunity to sell 5,000 additional units at $14.30 per unit to an exporter who plans to market the
product under its own brand name in a foreign market. The additional business is therefore not expected to affect the regular selling price or quantity of sales of FDE Manufacturing Company.
Prepare a differential analysis report, dated April 21 of the current year, on the proposal to sell at the special price.
FDE Manufacturing Company
Proposal to Sell to Exporter
April 21, 20xx
Differential revenue from accepting offer:
Revenue from sale of 5,000 additional units at $14.30
Differential cost of accepting offer:
Variable costs and expenses of 5,000 additional units at $13
Differential income from accepting offer
$
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