Question
Google Can't Help (GCH) Inc. has a normal plant capacity of 75,000 units per month. Due a large quantity of inventory in house, GCH thinks
Google Can't Help (GCH) Inc. has a normal plant capacity of 75,000 units per month. Due a large quantity of inventory in house, GCH thinks it will produce only 60,000 units in October. Fixed costs and expenses per month are $150,000 ($2 per unit at regular plant capacity), and variable costs and expenses are $13 per unit. The current sales price is $25 per item. The company has a chance to sell 5,000 additional units at $14.30 per unit to a company that will sell the product under its own name in England. The added business is not expected to affect the GCH's selling price or number of units sold. Prepare a differential analysis report, dated October 16 of the current year, on the proposal to sell at the special price.
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