Matipid Division of Expenditures Company expects the following results for 2019: Unit sales 70,000 Unit selling price P10 Unit variable cost P4 Total fixed costs P300,000 Total investment P500,000 The...

Matipid Division of Expenditures Company expects the following results for 2019:
Unit sales 70,000
Unit selling price P10
Unit variable cost P4
Total fixed costs P300,000
Total investment P500,000
The minimum required ROI is 15 percent, and divisions are evaluated on residual income. A

foreign customer has approached Matipid’s manager with an offer to buy 10,000 units at P7 each. If

Matipid accepts the order, it would not lose any of the 70,000 units at the regular price. Accepting the

order would increase fixed costs by P10,000 and investment by P40,000.
What is the minimum price that Matipid could accept for the order and still maintain its expected

residual income?