structions . Prepare a differential analysis as of November 8 comparing operations using the present machine (Alternative 1) with operations using the new machine (Alternative 2). The analysis should indicate the differential profit that would result over the six-year period if the new machine is acquired. 2.- List other factors that should be considered before a final decision is reached. PR 25-3B Differential analysis for sales promotion proposal Obj. 1 Sole Mates Inc. is planning a one-month campaign for July to promote sales of one of its two shoe products. A total of $100,000 has been budgeted for advertising, contests, redeemable coupons, and other promotional activities. The following data have been assembled for their possible usefulness in deciding which of the products to select for the campaign: Tennis Shoes $ 85 Walking Shoes $100 $(19) (8) $ (32) (12) Unit selling price Unit production costs: Direct materials Direct labor Variable factory overhead Fixed factory overhead Total unit production costs Unit variable selling expenses Unit fixed selling expenses Total unit costs Operating income per unit $ (60) (10) (16) $(50) (6) (20) $176) 59 (15) $ (85) $ 15 No increase in facilities would be necessary to produce and sell the increased output. It is anticipated that 7,000 additional units of tennis shoes or 7,000 additional units of walking shoes could be sold without changing the unit selling price of either product. Instructions 1. Prepare a differential analysis as of June 19 to determine whether to promote tennis shoes (Alternative 1) or walking shoes (Alternative 2). 2. The sales manager had tentatively decided to promote walking shoes, estimating that operating income would be increased by $5,000 ($15 operating income per unit for 7,000 units, less promotion expenses of $100,000). The manager also believed that the selection of tennis shoes would reduce operating income by $37,000 ($9 operating income per unit for 7,000 units, les promotion expenses of $100,000). State briefly your reasons for supporting or opposing the tentative decision. 00 PR 25-4B Differential analysis for further processing Obj. 1 The management of International Aluminum Co. is considering whether to process aluminum Ingot further into rolled aluminum, Rolled aluminum can be sold for $2,200 per ton, and ingot can be sold without further processing for $1,100 per ton Ingot is produced in batches of 80 tons by smelting 500 tons of bauxite, which costs $105 per ton of bauxite. Rolled aluminum will require additional processing costs of $620 per ton of ingot, and 1.25 tons of ingot will produce 1 ton of rolled aluminum (due to trim losses). Instructions 1. Prepare a differential analysis as of February 5 to determine whether to sell aluminum ingot (Alternative 1) or process further into rolled aluminum Alternative 2). Brielly report your recommendations