3.4 Decision on Accepting Additional Business Madison Industries Inc. has an annual plant...
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Accounting
3.4
Decision on Accepting Additional Business Madison Industries Inc. has an annual plant capacity of 639,000 units, and current production is 464,000 units. Monthly fixed costs are $385,000, and variable costs are $25 per unit. The present selling price is $37 per unit. The company received an offer from Story Mills Company for 17,000 units of the product at $26 each. Story Mills Company will market the units in a foreign country under its own brand name. The additional business is not expected to affect the domestic selling price or quantity of sales of Madison Industries Inc. a. Prepare a differential analysis report for the proposed sale to Story Mills Company. Madison Industries Inc. Sell to Story Mills Company Differential Analysis Report Differential revenue from accepting the offer: Differential cost of accepting the offer: b. Madison Inc. should: c. What is the minimum price per unit that would produce a contribution margin? Round your answer to the nearest cent. $
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