Exercise 15-32 Pricing, Advertising, and Special-Order Decisions (LO 15-10)

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[The following information applies to the questions displayed below.] Corrientes Company produces a single product in its Buenos Aires plant that currently sells for 6.80 p per unit. Fixed costs are expected to amount to 59,000 p for the year, and all variable manufacturing and administrative costs are expected to be incurred at a rate of 2.40 p per unit. Corrientes has two salespeople who are paid strictly on a commission basis. Their commission is 11 percent of the sales revenue they generate. (Ignore income taxes.) (p denotes the peso, Argentinas national currency. Many countries use the peso as their national currency. On the day this exercise was written, Argentinas peso was worth $0.104 U.S. dollar.)

Exercise 15-32 Part 1

Required: 1. Suppose management alters its current plans by spending an additional amount of 4,200 p on advertising and increases the selling price to 7.80 p per unit. Calculate the profit on 64,000 units. (Do not round intermediate calculations. Enter your answer in pesos.)

2. The Sorde Company has just approached Corrientes to make a special one-time purchase of 16,000 units. These units would not be sold by the sales personnel, and, therefore, no commission would have to be paid. What is the price Corrientes would have to charge per unit on this special order to earn additional profit of 25,600 p? (Do not round intermediate calculations. Round your answer to 2 decimal places. Enter your answer in pesos.)