is dropped?Problem 14 (Special-Order Decision; Flexible and Committed Resources)Dexter Company has been approached by a new custorner with an offer topurchase 1,400 units of Dexter's product at a price of P3 each. The newcustomer is graphically separated from Dexter's other customers, and therewould be no effect on existing sales. Dexter normally produces 10,000 unitsbut only plans to produce and sell 8,000 in the coming year. The normal salesprice is P5 per unit. Unit cost information is as follows:PO.75Direct materialsDirect laborVariable overheadFixed overheadTotal0.800.402.00P3.95If Dexter accepts the order, no fixed manufacturing activities will be affectedbecause there is sufficient excess capacity. However, the distribution centerat the warehouse is operating at full capacity and would need to add capacitycosting P1,000 for every 5,000 units to e packed and shipped.Required: By how much will profit increase or decrease if the order saccepted?

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Description: is dropped?Problem 14 (Special-Order Decision; Flexible and Committed Resources)Dexter Company has been approached by a new custorner with an offer topurchase 1,400 units of Dexter's product at a price of P3 each. The newcustomer is graphically sepa

Working note :- Position before accepting the new order…

Answered: cer Company has been hase 1,400 units…

Business

Accounting

cer Company has been hase 1,400 units of D omer is graphically sep

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 40E

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(The following information applies to the questions displayed below.] Charlevoix Cases makes mobile phone cases. The company has collected the following price and cost characteristics: Sales price Variable costs Fixed costs $ 12.00 per case 5.50 per case 397,800 per year Exercise 3-34 (Algo) Basic Decision Analysis Using CVP (LO 3-1) Assume that the company plans to sell 76,200 units annually. Consider requirements (b), (d). and (d) independently of each other. Required: a. What will be the operating profit? b. What is the impact on operating profit if the sales price decreases by 20 percent? Increases by 10 percent? Note: Do not round intermediate calculations. c. What is the impact on operating profit if variable costs per unit decrease by 20 percent? Increase by 10 percent? Note: Do not round intermediate calculations. d. Suppose that fixed costs for the year are 20 percent lower than projected and variable costs per unit are 20 percent higher than projected. What impact will these…