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problem \#4: Differential Analysis (18 points) Duarte Mfg. Corp. splits its manufacturing operations into profit centers by product line, One such profit center manufactures a product, the PZ22, with production costs per unit based on a normal annual volume of 100,000 units are: The PZ22 is a tool used in plumbing and the manufacture of plastic products. It is sold to distributors at an average selling price of $100 per unit. The PZ22 incurs selling and administrative costs of $10 per unit plus $3,000,000 annually. The maximum capacity for PZ22 is 120,000 units annually to which all of the above cost rates are relevant. Duarte Mfg. Corp. has two offers for the PZ22 from companies that never purchased from Duarte in the past. 1) The first offer is from LeComte Company for 12,000 of standard Duarte units at $42 per unit. There is little likelihood that LeComte will purchase units in the future. 2) The second offer is from Martinez Corporation for 15,000 units at $35. Martinez is a potential new customer. To produce units for Martinez, Duarte would incur $30,000 of additional setup costs. Due to the special nature of the orders, Duarte Mfg. Company will only incur 50% of the relevant selling and administrative costs for both orders. The PZ22 product manager wants to reject both offers as the prices are below the production cost. ACFI 430/530 Cost Accounting Problem Set \#1 Ppring 202315 of 21 C. To be able to accept both orders, Duarte Mfg. Company would need to give up an order from a small customer, Peixoto Inc, that purchases, 7,500 onits at the normal selling price of 5100 per unit. (1) Compute the total contribution margin that would be foregone if the Pelxoto inc. order is dropped. Total Contribution Margin from Pelxoto inc. order (2 points ) Supporting Calculations Required: Compute the minimum selling price that Duarte Mfg. Company should accept from the Martinez Corporation special order to avoid a loss, Minimum Seling Price from Martinez Corporation speclal order ( 6 points)