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Differential Analysis Report on Changes in Selling Price

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Please help in preparing a differential analysis report on the case study mentioned, dated April 21 of the current year, on the proposal to sell at the special price.

'FDE 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 FDE Manufacturing Company'

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Differential analysis report (in $):

Incremental Revenue = Additional Units * ...

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The solution discusses the differential analysis report on changes in selling price.

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Prepare a differential analysis report: Devoe Construction Company

Devoe Construction Company is considering selling excess machinery with a book value of $280,000 (original cost of $400,000 less accumulated depreciation of $120,000) for $292,000, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $312,000 fr five years, after which it is expected to have no residual value. During this period of the lease, Devoe Construction Company's cost of repairs, insurance, and property tax expenses are expected to be $36,000.

a. Prepare a differential analysis report, dated January 3, 2010, for the lease or sell decision.

b. On the basis of the data presented, would it be advisable to lease or sell the machinery? Explain

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