A company manufactures 2,000,000 units of a product yearly. A new design of the product will reduce materials cost by 10%, but will increase processing cost by 1.5%. If material cost is P1.50 per unit and processing will cost P0.50 per unit, how much can the company afford to pay for the preparation of the new design and making changes in equipment?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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A company manufactures 2,000,000 units of a product yearly. A
new design of the product will reduce materials cost by 10%, but
will increase processing cost by 1.5%. If material cost is P1.50 per
unit and processing will cost P0.50 per unit, how much can the
company afford to pay for the preparation of the new design and
making changes in equipment?

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