1. How much is the differential cost per unit? 

2. How much is the differential profit per unit if the special order will be accepted?

3. If the special order is to be accepted, how much will be the increase or decrease in the profit of the company?

4. Based on your differential analysis, should the company accept or reject the special order? 

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Jerbee Inc. was contacted to manufacture a special order of 10,000 units for an international company. The special order asked for a price that will not exceed P50. No sales commission is needed for the special order but a handling cost of P2.00 per unit need to be incurred for export. Regular sales will not be affected if special order is to be accepted. The company is currently operating at 80,000 units even its maximum capacity is at 100,000 units. This is still regardless of the special order. The following are the unit selling price and costs on estimated actual capacity for the coming year: Selling price P65.00 DM P15 DL 20 VOH 7.50 FOH 3.00 Commission 5.00 Other variable marketing expenses 1.50 Other fixed marketing expenses 0.50 General Variable expenses 3.00 General Fixed expenses 1.00 Jerbee Inc. was contacted to manufacture a special order of 10,000 units for an international company. The special order asked for a price that will not exceed P50. No sales commission is needed for the special order but a handling cost of P2.00 per unit need to be incurred for export. Regular sales will not be affected if special order is to be accepted. The company is currently operating at 80,000 units even its maximum capacity is at 100,000 units. This is still regardless of the special order. The following are the unit selling price and costs on estimated actual capacity for the coming year: Selling price P65.00 DM P15 DL 20 VOH 7.50 FOH 3.00 Commission 5.00 Other variable marketing expenses 1.50 Other fixed marketing expenses 0.50 General Variable expenses 3.00 General Fixed expenses 1.00

Answer rating: 100% (QA)

Answer To solve this problem we need to perform a differential cost and profit analysis Given inform... View the full answer