Melrose can sell 68,000 units of Product C to regular customers next year. If Moore Company offers to buy the special order units at P95 per unit, the effect of accepting the special order for 7,000 units on Melrose's net operating income for next year will be a: The Melrose Company produces a single product, Product C. Melrose has the capacity to produce 70,000 units of Product C each year. If Melrose produces at capacity, the per unit costs to produce and sell one unit of Product C are as follows: Direct materials P20 Direct labor P17 Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense P13 P14 P12 P8 The regular selling price of one unit of Product C is P100. A special order has been received by Melrose from Moore Company to purchase 7,000 units of Product C during the upcoming year. If this special order is accepted, the variable selling expense will be reduced by 75%. Total fixed manufacturing overhead and fixed selling expenses would be unaffected except that Melrose will need to purchase a specialized machine to engrave the Moore name on each unit of product C in the special order. The machine will cost P10,500 and will have no use after the special order is filled. P93,500 increase P104,000 increase P114,500 increase P294,000 increase None of the above
Melrose can sell 68,000 units of Product C to regular customers next year. If Moore Company offers to buy the special order units at P95 per unit, the effect of accepting the special order for 7,000 units on Melrose's net operating income for next year will be a: The Melrose Company produces a single product, Product C. Melrose has the capacity to produce 70,000 units of Product C each year. If Melrose produces at capacity, the per unit costs to produce and sell one unit of Product C are as follows: Direct materials P20 Direct labor P17 Variable manufacturing overhead Fixed manufacturing overhead Variable selling expense Fixed selling expense P13 P14 P12 P8 The regular selling price of one unit of Product C is P100. A special order has been received by Melrose from Moore Company to purchase 7,000 units of Product C during the upcoming year. If this special order is accepted, the variable selling expense will be reduced by 75%. Total fixed manufacturing overhead and fixed selling expenses would be unaffected except that Melrose will need to purchase a specialized machine to engrave the Moore name on each unit of product C in the special order. The machine will cost P10,500 and will have no use after the special order is filled. P93,500 increase P104,000 increase P114,500 increase P294,000 increase None of the above
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Melrose can sell 68,000 units of Product C to regular customers next year.
If Moore Company offers to buy the special order units at P95 per unit, the
effect of accepting the special order for 7,000 units on Melrose's net
operating income for next year will be a:
The Melrose Company produces a single product, Product C. Melrose has the capacity to
produce 70,000 units of Product C each year. If Melrose produces at capacity, the per unit
costs to produce and sell one unit of Product C are as follows:
Direct materials
P20
Direct labor
P17
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling expense
| Fixed selling expense
P13
P14
P12
P8
The regular selling price of one unit of Product C is P100. A special order has been received
by Melrose from Moore Company to purchase 7,000 units of Product C during the upcoming
year. If this special order is accepted, the variable selling expense will be reduced by 75%.
Total fixed manufacturing overhead and fixed selling expenses would be unaffected except
that Melrose will need to purchase a specialized machine to engrave the Moore name on each
unit of product C in the special order. The machine will cost P10,500 and will have no use
after the special order is filled.
P93,500 increase
P104,000 increase
P114,500 increase
P294,000 increase
None of the above
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