Reference no: EM132585877

Summer Corp produces high end swimming pool floats. The Floater 5000 sells for $300. Summer produces and sells 6,000 of them per year. Cost data are as follows:

Variable manufacturing $120 per unit

Variable selling and administrative $19 per unit

Fixed manufacturing $390,000 per year

Fixed selling and administrative $175,000 per year

• Pools R Us has asked Summer Corp to produce 50 units at a special price of $240 per unit for a one-time only sale. 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.

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