NUBD Company is currently operating at a loss of P20,000. The sales manager has received a special order for 5,000 units of product, which normally sells for P35 per unit. Costs associated with the product are: direct material, P6; direct labor, P10; variable overhead, P3; applied fixed overhead, P4; and variable selling expenses, P2. The special order would allow the use of a slightly lower grade of direct material, thereby lowering the price per unit by P1.50 and selling expenses would be decreased by P1.25. If NUBD wants this special order to increase the total net income for the firm to P10,000, what sales price must be quoted for each of the 5,000 units?
NUBD Company is currently operating at a loss of P20,000. The sales manager has received a special order for 5,000 units of product, which normally sells for P35 per unit. Costs associated with the product are: direct material, P6; direct labor, P10; variable overhead, P3; applied fixed overhead, P4; and variable selling expenses, P2. The special order would allow the use of a slightly lower grade of direct material, thereby lowering the price per unit by P1.50 and selling expenses would be decreased by P1.25. If NUBD wants this special order to increase the total net income for the firm to P10,000, what sales price must be quoted for each of the 5,000 units?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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NUBD Company is currently operating at a loss of P20,000. The sales manager has received a special order for 5,000 units of product, which normally sells for P35 per unit. Costs associated with the product are: direct material, P6; direct labor, P10; variable overhead, P3; applied fixed overhead, P4; and variable selling expenses, P2. The special order would allow the use of a slightly lower grade of direct material, thereby lowering the price per unit by P1.50 and selling expenses would be decreased by P1.25. If NUBD wants this special order to increase the total net income for the firm to P10,000, what sales price must be quoted for each of the 5,000 units?
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