Nonroutine decision making: Accept or Reject Special order Kapoy Jud Company has the capacity to manufacture 150,000 units per year and currently is producing at 80% of its manufacturing capacity. A regular customer offers to buy 30,000 units at ₱30 each. On per unit basis, selling price is ₱40, DM costs ₱12, DL is ₱9, and Fixed MOH applied is ₱15. Furthermore, in producing special order of 30,000 units, fixed MOH costs would remain unchanged but there would be variable OH costs of ₱6 per unit that will be incurred. A. If the special order is accepted, how much would be the net effect on the profit? B. Assume that the special order requires 35,000 units, how much would be the net effect on the profit? How many regular sales units will Kapoy Jud be willing to sacrifice if the special order is priced at 30? C. What is the minimum acceptable price Kapoy Jud Company can tolerate?
Nonroutine decision making: Accept or Reject Special order
Kapoy Jud Company has the capacity to manufacture 150,000 units per year and currently is producing at 80% of its manufacturing capacity. A regular customer offers to buy 30,000 units at ₱30 each. On per unit basis, selling price is ₱40, DM costs ₱12, DL is ₱9, and Fixed MOH applied is ₱15. Furthermore, in producing special order of 30,000 units, fixed MOH costs would remain unchanged but there would be variable OH costs of ₱6 per unit that will be incurred.
A. If the special order is accepted, how much would be the net effect on the profit?
B. Assume that the special order requires 35,000 units, how much would be the net effect on the profit? How many regular sales units will Kapoy Jud be willing to sacrifice if the special order is priced at 30?
C. What is the minimum acceptable price Kapoy Jud Company can tolerate?
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