Problem 7 (Make or Buy) Mickey Company uses 5,000 units of Part Z each year as a component in the assembly of one of its products. The company is presently producing Part Z internally at a total cost of P100,000, computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total costs P 15,000 30,000 10,000 45,000 P100.000 An outside supplier has offered to provide Part Z at a price of P18 per unit. Mickey Company stops producing the part internally, one-third of the fixed manufacturing overhead would be eliminated. Required: Prepare an analysis showing the annual peso advantage or disadvantage of accepting the outside supplier's offer. Problem 14 (Special-Order Decision; Flexible and Committed Resources) Dexter Company has been approached by a new customer with an offer to purchase 1,400 units of Dexter's product at a price of P3 each. The new customer is graphically separated from Dexter's other customers, and there would be no effect on existing sales. Dexter normally produces 10,000 units but only plans to produce and sell 8,000 in the coming year. The normal sales price is P5 per unit. Unit cost information is as follows: Direct materials Direct labor Variable overhead Fixed overhead Total P0.75 0.80 0.40 2.00 P3.95 If Dexter accepts the order, no fixed manufacturing activities will be affected because there is sufficient excess capacity. However, the distribution center at the warehouse is operating at full capacity and would need to add capacity costing P1,000 for every 5,000 units to e packed and shipped. Required: By how much will profit increase or decrease if the order is accepted? Problem 17 (Sell or Process Further; Basic Analysis) SHE, Inc., produces three products (Alpha, Beta, and Gamma) from a common input. The joint costs for a typical quarter follow: Direct materials Direct labor Overhead P500,000 36,000 72,000 The revenues from each product are as follows: Alpha, P100,000; Beta, P93,000; and Gamma, P30,000. Management is considering processing Alpha beyond the split-off point, which would increase the sales values of Alpha to P120,000. However, to process Alpha further means that the company must rent some special equipment costing P15,400 per quarter. Additional materials and labor also needed would cost P8,500 per quarter. Required: 1. What is the operating profit earned by the three products for one quarter?