= =

6. Assume that as of October 31, 16,000 units of flat panel displays have been produced and sold during the current year. Analysis of the domestic market indicates that 2,500 additional units are expected to be sold during the remainder of the year at the normal product price determined under the product cost method. On November 5, Digital Displays Inc. received an offer from Andes Visual Inc. for 1,000 units of flat panel displays at $225 each. Andes Visual Inc. will market the units in Peru under its own brand name, and no variable selling and administrative expenses associated with the sale will be incurred by Digital Displays Inc. The additional business is not expected to affect the domestic sales of flat panel displays, and the additional units could be produced using existing factory, selling, and administrative capacity. a. Prepare a differential analysis of the proposed sale to Andes Visual Inc. If an amount is zero, enter "0". Differential Analysis Reject (Alt. 1) or Accept (Alt. 2) Order November 5 Line Item Description Reject Order Accept Order Differential Effects (Alternative 1) (Alternative 2) (Alternative 2) Revers Costs: Variable manufacturing costs Profit (loss) Feedback Check My Work 11000 00 6. a. Subtract the additional variable manufacturing costs from the additional revenues. Determine the differential effect on income of the revenues, costs, and income (loss).