Crystal Displays Inc. recently began production of a new product, flat panel displays, which required the investment of $1,300,000 in assets. The costs of producing and selling 5,000 units of flat panel displays are estimated as follows:

1	Variable costs per unit:
2	Direct materials	$121.00
3	Direct labor	28.00
4	Factory overhead	49.00
5	Selling and administrative expenses	37.00
6	Total	$235.00
7	Fixed costs:
8	Factory overhead	$254,000.00
9	Selling and administrative expenses	147,000.00

Crystal Displays Inc. is currently considering establishing a selling price for flat panel displays. The president of Crystal Displays has decided to use the cost-plus approach to product pricing and has indicated that the displays must earn a 12% rate of return on invested assets.

6.

Assume that as of August 1, 3,000 units of flat panel displays have been produced and sold during the current year. Analysis of the domestic market indicates that 2,000 additional units are expected to be sold during the remainder of the year at the normal product price determined under the product cost concept. On August 3, Crystal Displays Inc. received an offer from Maple Leaf Visual Inc. for 900 units of flat panel displays at $221 each. Maple Leaf Visual Inc. will market the units in Canada under its own brand name, and no variable selling and administrative expenses associated with the sale will be incurred by Crystal 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 Maple Leaf Visual Inc. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter 0. A colon (:) will automatically appear if required.
B.	Based on the differential analysis in part (A), should the proposal be accepted?

Labels
Cash flows from operating activities
Costs
Amount Descriptions
Cash payments for merchandise
Cash received from customers
Fixed manufacturing costs
Income (Loss)
Revenues
Variable manufacturing costs

6. A. Prepare a differential analysis of the proposed sale to Maple Leaf Visual Inc. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter 0. A colon (:) will automatically appear if required.

Differential Analysis Reject Order (Alternative 1) or Accept Order (Alternative 2) August 3 Differential Effect Reject Order Accept Order 1 on Income (Alternative 1) (Alternative 2) (Alternative 2) 2. 3 4Label) 5 6