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Assuming that this special offer will not affect the regular market for the product, should the company accept the special offer? No, since it will mean a loss of P1.16 million Yes, since it will contribute P1.8 million margin Yes, since it will contribute P2.8 million margin

Assuming that this special offer will not affect the regular market for the product, should the company accept the special offer? No, since it will mean a loss of P1.16 million Yes, since it will contribute P1.8 million margin Yes, since it will contribute P2.8 million margin

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Roger Corp.

Roger Corp., which has experienced excess production capacity, received a special offer for its product B at P78 per unit for 100,000 units. It has been using the variable costing method and has been pricing its product at P96 per unit based on a mark-up of 60% as follows: Direct materials P30 Direct labor P20 Variable overhead P6 Variable selling & administrative P4 Total variable expenses P60 60% mark-up P36 Selling price P96 Assuming that this special offer will not affect the regular market for the product, should the company accept the special offer? No, since it will mean a loss of P1.16 million Yes, since it will contribute P1.8 million margin Yes, since it will contribute P2.8 million margin O No, since it will mean a loss of P1.8 million
Transcribed Image Text:Roger Corp., which has experienced excess production capacity, received a special offer for its product B at P78 per unit for 100,000 units. It has been using the variable costing method and has been pricing its product at P96 per unit based on a mark-up of 60% as follows: Direct materials P30 Direct labor P20 Variable overhead P6 Variable selling & administrative P4 Total variable expenses P60 60% mark-up P36 Selling price P96 Assuming that this special offer will not affect the regular market for the product, should the company accept the special offer? No, since it will mean a loss of P1.16 million Yes, since it will contribute P1.8 million margin Yes, since it will contribute P2.8 million margin O No, since it will mean a loss of P1.8 million
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