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

Direct materials

P100,000

Direct labor

120,000

Variable overhead

60,000

Fixed overhead

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 operating overtime. Variable costs increase by P14 per unit for overtime production. Fixed overhead costs remain unchanged when overtime operations occur. Pillar Company has received a special order from a wholesaler who has offered to buy 1,000 units at P45 each. What is the impact on Pillar's operating income if this special order is accepted?

Answer rating: 100% (QA)

Impact of Special Order on Pillars Operating Income 1 Cost Calculation at Normal Production Level To... View the full answer