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What effect will the order have on the short-term profit

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Reference no: EM132995310

Question - Potter has received a special order for 10,000 units of its product at a special price of P24. The product normally sells for P32 and has the following manufacturing costs per unit are as follows: Direct materials, P9.60, Direct P4.80, Variable manufacturing overhead P3.20, and Fixed manufacturing overhead P9.60.

Potter is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Potter accepts the order, what effect will the order have on the company's short-term profit?

a. P64,000, increase

b. P80,000, increase

c. P80,000, decrease

d. P64,000, decrease

Reference no: EM132995310

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