5. ACCEPT OR REJECT. Mobile Legend Company makes outdoor shirts. Data relating to the coming year's planned operations are as follows: Sales (230,000 shirts) Cost of Goods Sold Gross Profit P 2,140,000 2,760,000 P 1,380,000 Selling and Administrative expenses 805,000 Income P 575,000 The factory has the capacity to make 250,000 shirts per year. Fixed costs included in cost of goods sold are P 690,000. The only variable selling, general, and administrative expenses are a 10% sales commission and a P 1.50 per shirt licensing fee paid to the designer. A chain store manager has approached the sales manager of Wildcard products offering to buy a 15,000 shirts at P 14 per shirt. These shirts would be sold in areas where Wildcard's shirts are not now sold. The sales manager believes that accepting the offer would result in a loss because the average total cost of a shirt is P 15.50 ([2,760,000+ P 805,000]/230,000). He feels that even though sales commissions would not be paid on the order, a loss would still result. Required: 1. Determine whether the company should accept the offer. 2. Suppose that the order was 40,000 shirts instead of P 15,000. What would the company's income be if it accepts the order? What is the lowest price that the company could accept and still earn P 575,000 using the order size of 15.000 units and 40,000 units How many units of sales at the regular price could the company loss before it becomes unprofitable to accept the order in requirement number 2.7