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At what price for the new equipment would Landor be

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Question - LANDOR Appliance Comp. makes and sell electric fans. Each fan regularly sells for P42. The following cost data per fan is based in the full capacity of 150,000 fans produced each period

Direct material P8

Direct labor P9

Factory overhead (70% variable and 30% unavoidable Fixed) P10

A special order has been received by Landor for sale of 25,000 fan to would Landor overseas customer. The only selling cost that would be incurred on this order would be p4 per fan for shipping. Landor is now selling P120,000 fans through regular channels each period.

Required -

1. What would Landor use as a minimum selling price for this special order?

2. Given the above date, how much would Landor regard as sunk cost

3. If Landor chooses to buy a new equipment, the increase or decrease in total company net income over the next five years will be?

4. At what price for the new equipment would Landor be economically indifferent between keeping the existing equipment or purchasing the new equipment?

Reference no: EM132998606

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