Summer Corp produces high end swimming pool floats. The
Floater 5000 sells for $300. Summer produces and sells 6,000 of
them per year. Cost data are as follows:
Variable manufacturing
$120
per unit
Variable selling and administrative
$19
per unit
Fixed manufacturing
$390,000
per year
Fixed selling and administrative
$175,000
per year
Pools R Us has asked Summer Corp to produce 50 units at a
special price of $240 per unit for a one-time only sale. The sale
will not negatively impact the company's regular sales activities
and will require the normal variable manufacturing costs and
selling and administrative costs.
There is plenty of excess capacity and the deal will not
impact fixed costs.
Create a Differential Analysis of a Special Pricing Decision
showing the expected increase or decrease in operating income if
this order is accepted. You can see a sample analysis in Chapter
25, Exhibit 25-5.
This assignment is worth 10 points overall, 5 points for
proper setup, 2 points for correct final number answer, 1 point for
your decision (Accept or Reject the special pricing request), 2
points for working formulas within the cells.
When your file is ready to submit, click on "Graded: Learning
Unit 4, Ch 25 Special Pricing Decision" above. In the next screen,
attach your file.
This assignment must be submitted in EXCEL with working
formulas in at least two cells.