5. Piit Company currently sells 1,000 units of product M for P2 each. Variable costs are P1.50. A discount store has offered P1.70 per unit for 400 units of product M. The managers believe that if...

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Extracted text: 5. Piit Company currently sells 1,000 units of product M for P2 each. Variable costs are P1.50. A discount store has offered P1.70 per unit for 400 units of product M. The managers believe that if they accept the special order, they will lose some sales at the regular price. Determine the number of units they could lose before the order become unprofitable. a. 160 units b. 200 units C. 400 units d. 500 units For each question, please explain why is that your answer and how did you come up with that answer. Please explain in detail especially the problems. I'm not a fast learner so please bear with me and explain it clearly. Also, use a proper/good format in explaining. Include also the formula for each problem. Thank you in advance.


Extracted text: 1. Relevant of differential cost analysis a. takes all variable and fixed costs into account to analyze decision alternatives b. considers only variable costs as they change with each decision alternative C. considers the change in reported net income for each alternative to arrive at the optimum decision for the company d. considers all variable and fixed costs as they change with each decision alternatives 2. The term that refers to costs incurred in the past that are not relevant to a future decision is a. full absorption cost b. sunk cost c. incurred marginal cost d. under allocated indirect cost 3. What information should a company take into consideration when making a decision on whether to add or drop a product line? a. Revenue and all expenses. b. Revenue and variable expenses only. c. Revenue, variable expenses, and avoidable fixed expenses. d. Revenue, variable expenses, and unavoidable fixed expenses. 4. Peru Company, which manufactures sneakers, has enough capacity available to accept a special order of 20,000 pairs of sneakers at Ph 6.00 a pair. The normal selling price is Ph 10.00 a pair. Variable manufacturing costs are Ph 4.50 a pair, and fixed manufacturing costs are Ph 1.50 a pair. Peru will not incur any selling expenses as a result of the special order. What could be the effect on operating income if the special order could be accepted without affecting normal sales? a. Ph 0 b. Ph 30,000 increase c. Ph 90.000 increase d. Ph 120.000 increase