Paper Roses Boutique has been approached by the community college to make special polo shirts for the faculty and staff. The college is willing to buy 4,000 polos with its own design for P6.00 each. The company normally sells its shirts for P12.00 each. The company has enough excess capacity to make this order. A breakdown of the costs is as follows: Direct materialsP2.00 Direct labor0.50 Variable factory overhead1.50 Fixed factory overhead_2.50 Total cost per unitP6.50Should Paper Roses Boutique accept the special order made by the college? Show computations, but a formal differential analysis report is not required.

Special Order Decision: It is a one-time order that a customer makes. Here, managers perform…

Answered: Paper Roses Boutique has been…

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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Paper Roses Boutique has been approached by the community college to make special polo shirts for the faculty and staff. The college is willing to buy 4,000 polos with its own design for P6.00 each. The company normally sells its shirts for P12.00 each. The company has enough excess capacity to make this order. A breakdown of the costs is as follows:

	Direct materials	P2.00
	Direct labor	0.50
	Variable factory overhead	1.50
	Fixed factory overhead	_2.50
	Total cost per unit	P6.50

Should Paper Roses Boutique accept the special order made by the college? Show computations, but a formal differential analysis report is not required.

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