4.20 P33.00 1,250,000 2.100,000 P16.500.000 Fixed Total cost Fixed manufacturing overhead is budgeted at P4,500,000.A customer has offered to purchase 100,000 units at P25,000 each to be packaged in large cartons, not the normal individual containers. It will pick up the units in its own trucks. Thus variable selling and administrative expenses will decrease by 60%. The company should compare the total revenue to be derived from this order with the total relevant costs of: a. P1,830,000 b. P1,880,000 P2,930,000 d. P3,150,000 C. (cia)

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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10-52 pls explain and solve

52. A Company manufactures a product that is sold for P37.95. It uses absorption cost
system. Plant capacity is 750,000 units annually, but normal volume is 500,00 units.
Transcribed Image Text:52. A Company manufactures a product that is sold for P37.95. It uses absorption cost system. Plant capacity is 750,000 units annually, but normal volume is 500,00 units.
Costs at normal are given below.
Unit Cost
P 9.80
4.50
12.00
Total Cost
P 4,900,000
2,250,000
6,000,000
Direct materials
Direct labor
Manufacturing overhead
Selling and administrative:
Variable
Fixed
Total cost
2.50
4.20
P33.00
1,250,000
2.100,000
P16.500.000
Fixed manufacturing overhead is budgeted at P4,500,000.A customer has offered to
purchase 100,000 units at P25,000 each to be packaged in large cartons, not the normal
individual containers. It will pick up the units in its own trucks. Thus variable selling and
administrative expenses will decrease by 60%. The company should compare the total
revenue to be derived from this order with the total relevant costs of:
a. P1,830,000
b. P1,880,000
P2,930,000
d. P3,150,000
C.
(cia)
Transcribed Image Text:Costs at normal are given below. Unit Cost P 9.80 4.50 12.00 Total Cost P 4,900,000 2,250,000 6,000,000 Direct materials Direct labor Manufacturing overhead Selling and administrative: Variable Fixed Total cost 2.50 4.20 P33.00 1,250,000 2.100,000 P16.500.000 Fixed manufacturing overhead is budgeted at P4,500,000.A customer has offered to purchase 100,000 units at P25,000 each to be packaged in large cartons, not the normal individual containers. It will pick up the units in its own trucks. Thus variable selling and administrative expenses will decrease by 60%. The company should compare the total revenue to be derived from this order with the total relevant costs of: a. P1,830,000 b. P1,880,000 P2,930,000 d. P3,150,000 C. (cia)
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