Question 7 (Q 8)

ZBar Supplies is currently producing 20,000 tape dispensers per month, but has the capacity to produce 25,000 tape dispensers without incurring any additional fixed costs. The selling price is $5.00 per dispenser and variable cost per unit is $2.00. Total fixed costs are $35,000. Marathon Corporation approaches ZBar with a proposal to buy 4,000 dispensers at a price of $4.25 per unit. Prepare the incremental analysis that ZBar should use to evaluate this situation. Assuming that other customers are not affected, should ZBar accept Marathons offer?