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Peru Company, which manufactures sneakers, has enough capacity available to accept a special order of 20,000 pairs of sneakers at Ph 6.00 a pair.
Peru Company, which manufactures sneakers, has enough capacity available to accept a special order of 20,000 pairs of sneakers at Ph 6.00 a pair. The normal selling price is Ph 10.00 a pair. Variable manufacturing costs are Ph 4.50 a pair, and fixed manufacturing costs are Ph 1.50 a pair. Peru will not incur any selling expenses as a result of the special order. What could be the effect on operating income if the special order could be accepted without affecting normal sales? 5. Piit Company currently sells 1,000 units of product M for P2 each. Variable costs are P1.50. A discount store has offered P1.70 per unit for 400 units of product M. The managers believe that if they accept the special order, they will lose some sales at the regular price. Determine the number of units they could lose before the order become unprofitable.
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1 Effect on operating income if Peru Company accepts the special order To determine the effect on operating income we need to calculate the incremental profit from accepting the special order Incremen...Get Instant Access to Expert-Tailored Solutions
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