1. DEF Corporation sells product A at a price of P 21 per unit. DEFs cost per unit based on the full capacity 190,000 units is as follows:

Direct materials P 5.00

Direct labor P 6.00

Overhead (2/3 of which is fixed) P 8.00

Total P19.00

A special order offering to buy 21,000 units was received from a foreign distributor. The only selling costs that would be incurred on this order would be P 4 per unit of shipping. DEF has sufficient existing capacity to manufacture the additional units. To achieve an increase in operating income of P 40,000, how much should DEF charge as selling price? Show your solution.

2. Jared Company produces and sells 10,000 units of its product for P30. Variable manufacturing cost per unit is P13. Total fixed manufacturing costs (up to the maximum capacity of 13,000 units) are P40,000. The Variable operating cost is P2 per unit and fixed operating costs total P13,000. Mr. X placed a special order for 2,500 units for P17 each. He is willing to shoulder the delivery costs; therefore, the business will not incur additional variable operating costs. If you are the owner of Jared, should you accept or reject the special order?