Residential Glass Company has a plant capacity of 60,000 units, and current production is 45,000 units. Monthly

Question:

Residential Glass Company has a plant capacity of 60,000 units, and current production is 45,000 units. Monthly fixed costs are $$200,000,$ and variable costs are

$$27$ per unit. The present selling price is $$40$ per unit. On May 18, the company received an offer from Barker Company for 1 0,000 units of the product at $$30$ each. The Barker Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the regular selling price or quantity of sales of Residential Glass Company,

a. Prepare a differential analysis report for the proposed sale to Barker Company.

b. Briefly explain the reason why accepting this additional business will increase operating income.

c. What is the minimum price per unit that would produce a contribution margin?

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