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MZE Manufacturing Company has a normal plant capacity of 37,500 units per month. Because of an extra-large quantity of inventory on hand, it expects
MZE Manufacturing Company has a normal plant capacity of 37,500 units per month. Because of an extra-large quantity of inventory on hand, it expects to produce only 30,000 units in May. Monthly fixed costs and expenses are $112,500 ($3.00 per unit at normal plant capacity) and variable costs and expenses are $8.25 per unit. The present selling price is $13.50 per unit. The company has an opportunity to sell 7,500 additional units at $9.90 per unit to an exporter who plans to market the product under its own brand name in a foreign market. The additional business is therefore not expected to affect the regular selling price or quantity of sales of MZE Manufacturing Company. Prepare a differential analysis report dated April 21 of the current year. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Reject Order (Alternative 1) or Accept Order (Alternative 2) Revenues Costs: Variable manufacturing costs Profit (loss) April 21 Reject Order Accept Order (Alternative 1) (Alternative 2) Differential Effects (Alternative 2) Should MZE reject or accept the special order? MZE should the special order.
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