=+PR 25-2B Differential analysis report for machine replacement proposal obj. 1 1174 Chapter 25 Differential Analysis and Product Pricing Belle Cosmetics Company is planning a one-month campaign for June to promote sales of one of its two cosmetics products. A total of $120,000 has been budgeted for advertising, contests, redeemable coupons, and other promotional activities. The following data have been assembled for their possible usefulness in deciding which of the products to select for the campaign:

Moisturizer Perfume Unit selling price $52 $68 Unit production costs:

Direct materials $ 9 $11 Direct labor 2 3 Variable factory overhead 3 4 Fixed factory overhead 5 6 Total unit production costs $19 $24 Unit variable selling expenses 11 15 Unit fixed selling expenses 4 8 Total unit costs $34 $47 Operating income per unit $18 $21 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 11,000 additional units of moisturizer or 9,000 additional units of perfume could be sold without changing the unit selling price of either product.

Instructions