MZE Manufacturing Company Has a Normal Plant Capacity of 37,500

question 137

Essay

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 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, on the proposal to sell at the special price.

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Definitions:

Grasslands

Ecosystems dominated by grasses, often found in regions where there is not enough regular rainfall to support the growth of a forest, but more than that to form a desert.

Cool, Dry Season

A period in some climates characterized by lower temperatures and minimal precipitation, often occurring in the winter or the dry season in tropical regions.

Temperate Rain Forest

A biome located in temperate regions characterized by consistent rainfall throughout the year, resulting in lush, dense forests with a diverse array of plant and animal life.

Coniferous Forest

A type of biome characterized by evergreen trees that have needles and produce cones, typically found in northern latitudes.