XYZ Enterprises produces high quality blankets sold to hotels and resorts. Blankets must be well made because of frequent washings. Currently,XYZ sells 8,000 blankets at P50 each with the capacity to produce 10,000 blankets. XYZ is considering a special order from a hotel chain in South Africa for 1000 blankets at a price of P40. Currently, XYZ has the following costs: Unit Costs P200,000 Product Level Costs P40,000 Facility Costs P100,000 If XYZ accepts the special order, they will incur an additional P2 per blanket in foreign currency transaction costs. No other product or facility costs will change. Determine the increase (decrease) in income of the special order on XYZ.
XYZ Enterprises produces high quality blankets sold to hotels and resorts. Blankets must be well made because of frequent washings. Currently,XYZ sells 8,000 blankets at P50 each with the capacity to produce 10,000 blankets. XYZ is considering a special order from a hotel chain in South Africa for 1000 blankets at a price of P40. Currently, XYZ has the following costs:
|
Unit Costs |
P200,000 |
|
Product Level Costs |
P40,000 |
|
Facility Costs |
P100,000 |
If XYZ accepts the special order, they will incur an additional P2 per blanket in foreign currency
transaction costs. No other product or facility costs will change.
Determine the increase (decrease) in income of the special order on XYZ.
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