Reference no: EM132770233

Oliver Corp produces washers. Their newest product sells for $900. The company produces and sells 4,200 units per year. Cost data follows:

Variable manufacturing                       $450 per unit
Variable selling and administrative          $100 per unit
Fixed manufacturing                               $600,000 per year
Fixed selling and administrative                  $220,000 per year

• A potential deal has come up for a one-time sale of 20 units at a special price of $650 per unit. The sale will not negatively impact the company's regular sales activities and will require the normal variable manufacturing costs and selling and administrative costs.
• There is plenty of excess capacity and the deal will not impact fixed costs.

Problem 1: Create a Differential Analysis of a Special Pricing Decision showing the expected increase or decrease in operating income if this order is accepted.