4. Assume that 15,000 units of the halogen light have been produced and sold during the...

 

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4. Assume that 15,000 units of the halogen light have been produced and sold during the current year. Analysis of the domestic market indicates that 2,000 additional units of the halogen light are expected to be sold during the remainder of the year at the normal product price determined under the total cost concept. Twilight Lumina Company received an offer from Contech Inc. for 3,000 units of the halogen light at $52 each. Contech Inc. will market the units in Southeast Asia under its own brand name, and no selling and administrative expenses associated with the sale will be incurred by Twilight Lumina Company. The additional business is not expected to affect the domestic sales of the halogen light, and the additional units could be produced using existing capacity. a. Prepare a differential analysis report of the proposed sale to Contech Inc. Twilight Lumina Company Proposal to Sell to Contech Inc. Differential Analysis Report Line Item Description Differential revenue from accepting offer: Differential cost of accepting offer: Amount Differential profit from accepting offer b. Based on the differential analysis report in part (a), should the proposal be accepted? 4. Assume that 15,000 units of the halogen light have been produced and sold during the current year. Analysis of the domestic market indicates that 2,000 additional units of the halogen light are expected to be sold during the remainder of the year at the normal product price determined under the total cost concept. Twilight Lumina Company received an offer from Contech Inc. for 3,000 units of the halogen light at $52 each. Contech Inc. will market the units in Southeast Asia under its own brand name, and no selling and administrative expenses associated with the sale will be incurred by Twilight Lumina Company. The additional business is not expected to affect the domestic sales of the halogen light, and the additional units could be produced using existing capacity. a. Prepare a differential analysis report of the proposed sale to Contech Inc. Twilight Lumina Company Proposal to Sell to Contech Inc. Differential Analysis Report Line Item Description Differential revenue from accepting offer: Differential cost of accepting offer: Amount Differential profit from accepting offer b. Based on the differential analysis report in part (a), should the proposal be accepted?

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