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BB Co expects to incur the following costs at the planned production level of 10,000 units: Direct Materials, Php 100,000 Direct Labor, Php 120,000 Variable

BB Co expects to incur the following costs at the planned production level of 10,000 units:

Direct Materials, Php 100,000

Direct Labor, Php 120,000

Variable Overhead, Php 60,000

Fixed Overhead, Php 30,000

The selling price is P50 per unit. The company currently operates at full capacity of 10,000 units. Capacity can be increased to 13,000 units by working overtime. Variable costs would increase by P14 per unit for overtime production. Fixed overhead costs remain unchanged when overtime operations occur. BB has received a special order from Florante, Inc who has offered to buy 2,000 units at P45 each.

Should the Company accept the offer?

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