Reference no: EM132786776

After several years producing and selling at capacity(50,000units), Antik faced a year with projected sales and production of 38,000 units. A potential customer offered to purchase 7,000 units at a price of P18 each.

The normal sales price is P30 each. Unit cost information is as follows:

Direct materials 9
Direct labor 6.5
Variable overhead 2
Fixed overhead 3.75
Total 21.25

• Antik also pays a sales commission of P1.75. The commission would have to be paid on this order.

Required:

Problem 1: Should Antik accept the special order? By how much will profit increase or decrease if the order is accepted?

Problem 2: Suppose that Antik does not have to pay the sales commission on the special order. Should antik accept the special order? By how much will profit increase or decrease if the order is accepted?