FDE Manufacturing Company has a normal plant capacity of 37,500units per month. Because of an extra large quantity of inventory onhand, it expects to produce only 30,000 units in May. Monthly fixedcosts and expenses are $75,000 ($2 per unit at normal plantcapacity) and variable costs and expenses are $6.50 per unit. The present selling price is $12.50 per unit. The company has an opportunity to sell 7,500 additional units at $ 7.10 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 notexpected to affect the regular selling price or quantity of sales of FDE Manufacturing Company.
Prepare a differential analysis report, dated April 21 of thecurrent year, on the proposal to sell at the special price.