question archive Summer Corp produces high end swimming pool floats

Summer Corp produces high end swimming pool floats

Subject:AccountingPrice: Bought3

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. 
Make 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.
It needs to be submitted in Excel with working formulas in at least 2 cells.

pur-new-sol

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