Reference no: EM132766973

Question -

Q1. Cranberry has received a special order for 100 units of its product at a special price of P2,100. The product normally sells for P2,800 and has the following manufacturing costs per unit:

Direct Materials 840

Direct Labor 420

Variable manufacturing overhead 560

Fixed manufacturing overhead 700

Assume that Cranberry has sufficient capacity to fill the order without harming normal production and sales. If Cranberry accepts the order, what effect will the order have on the company's short-term profit?

2. Ross has received a special order for 10,000 units of its product at a special price of P30. The product normally sells for P40 and has the following manufacturing costs per unit:

Direct Materials 12

Direct Labor 6

Variable manufacturing overhead 4

Fixed manufacturing overhead 12

Assume that Ross has sufficient capacity to fill the order. If Ross accepts the order, what effect will the order have on the company's short-term profit?