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Applications of Differential Analysis Moscot manufactures high-end sunglasses that it sells in retail shops and online for $310, on average. Assume the following represent manufacturing and other costs. Variable Costs per Unit Direct materials... Direct labor..... Factory overhead Distribution Total ..... Fixed Costs per Month $ 80 Factory overhead .. 50 Selling and administrative.. $450,000 375,000 $825,000 35 Total 10 $175 The variable distribution costs are for transportation to retail partners. Assume the current monthly production and sales volume is 15,000 units. Monthly capacity is 20,000 units. d. A Swiss distributor has proposed to place a special, one-time order for 6,000 units at a special price of $250 per unit. The distributor would pay all transportation costs. There would be additional fixed selling and administrative costs of $1,000. Assume overtime production is not possible. e. Assume Moscat provides a designer case for each pair of sunglasses that it manufactures. A Chinese manufacturer has offered a one-year contract to supply the cases at a cost of $10 per unit. If Moscat accepts the offer, it will be able to reduce variable manufacturing costs by 5%,reduce fixed costs by $5,000, and rent out some freed-up space for $4,000 per month f. The glasses also come with a choice of lens tint. Assume that eliminating that option would reduce variable costs by $5 and eliminate $50,000 in fixed factory overhead. The selling price would likely have to decrease to $290 per unit

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