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 P1.8 million Yes, since it will contribute P1.8 million margin No, since it will mean a loss of P1.16 million Yes, since it will contribute P2.8 million margin
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
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?
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