Answer the following

Quiz 4 Problem I (Make or Buy): Tarlac Corporation is now making a small part that is used in one of its products. The company's accounting department reports the following per unit costs of producing the part internally: Direct Materials P15.00 Direct Labor 10.00 Variable Manufacturing Overhead 2.00 Fixed Manufacturing Overhead, traceable 4.00 Fixed Manufacturing Overhead, allocated 5.00 Depreciation of special equipment represents 75% of the traceable fixed manufacturing overhead cost with supervisory salaries representing the balance. The special equipment has no resale value and does not wear out through use. The supervisory salaries could be avoided if production of the part were discontinued. An outside supplier has offered to sell the part to Tarlac Corporation for P30 each, based on an order of 5,000 parts per year and Tarlac will be incurring an additional P2 per unit for quality inspection of incoming parts. Required: 1. Should Tarlac accept this offer, or continue to make the parts internally? 2. Assuming that if Tarlac accept the offer it will have enough idle capacity to produce another product that will have a contribution margin of P 15,000, should Tarlac accept the offer or continue to make the parts internally?Problem 2 (Accept or Reject): KFC Corporation has the following cost per unit information about its only product Zinger: Direct Materials P 40.00 Direct Labor 30.00 Variable Overhead 20.00 Fixed Overhead 10.00* Other Costs: Variable Selling Expenses 15.00 Fixed Selling Expenses 50,000 *Based on 10,000 units of normal production The company is currently operating at 90% of normal capacity. A prospective customer has approach management offering to buy 1,500 units at a special price of P 95.00 instead of the regular price of P130.00. The company will be able to save on variable selling expenses while variable overhead will decrease by 25% but will be required to purchase special equipment amounting to P 10,000 which will have no other use after the order has been served. Required: 1. What should be the minimum price of the special order for KFC to accept such? 2. What should have been the current operating capacity of the company in order for the decision to be indifferent?Problem 3 (Drop or Maintain) Sophisticates' Corner sells clothing, shoes, and accessories at a suburban location near Boston. Information for the just concluded calendar year follows. Clothing Shoes Accessories Sales P 850,000 P 320,000 P 150,000 Less: Variable Costs P 510,000 P 270,000 P 82,500 Fixed Costs 290,000 70,000 42,000 Operating Income 50,000 (20,000) P 25,500 Management is considering closing the shoe operation because of the loss and to permit expanding the space that is currently devoted to accessories sales. A salaried salesperson in the shoe department who earns P 45,000 will be terminated; however, all other departmental fixed costs will continue to be incurred. Sophisticates' Corner will spend P 16,000 on remodeling costs and anticipates that accessories sales will increase by P 70,000. This additional sales revenue is expected to generate a 35% contribution margin for the firm. Finally, because clothing customers often purchased shoes and feel strongly about "one-stop shopping," clothing sales are expected to fall by 15% if the shoe department is closed. Required: Determine whether the shoe department should be closed