Reference no: EM132982716
Question - Reggie Corporation manufactures a single product with the following unit costs for 1,000 units:
Direct materials P2,400
Direct labor 960
Factory overhead (30% variable) 1,800
Selling expenses (50% variable) 900
Administrative expenses (10% variable) 840
Total per unit P6,900
Recently, a company approached Reggie Corporation about buying 100 units for P5,100 each. Currently, the models are sold to dealers for P7,800.
Assume there is additional capacity for 60 more units and the firm has to reduce regular customer sales by 40 units in order to contract the special order. There are selling expenses on only the sales to the regular customers.
Required -
1. What is the minimum acceptable price to Reggie Corporation? Round to one decimal place.
2. What is the total net income of the company if the special order of 100 units is accepted?
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