Graded: Learning Unit 4, Ch 10, Special Pricing Decision

AJ & Company manufactures canoes. Their newest product sells for $1100.The company produces and sells 3,500 units per year. Cost data follows:

Variable manufacturing $630 per unit

Variable selling and administrative $100 per unit

Fixed manufacturing $400,000 per year

Fixed selling and administrative $320,000 per year

A potential deal has come up for a one-time sale of 20 units at a special price of $900 per unit.

The sale will not negatively impact the company's regular sales activities.

It will require the normal variable manufacturing costs and variable selling and administrative costs.

There is plenty of excess capacity and the deal will not impact fixed costs.

Create 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 10, Exhibit M10-5.

This assignment is worth 15 points overall, 9 points for proper setup, 3 points for correct final answer, 3 points for formulas.

When your file is ready to submit, click on "Graded:Learning Unit 4, Ch 10 Special Pricing Decision" above.In the next screen, attach your file.