Topic: Differential Cost Analysis A. Make or Buy Decision - 10 points B. Special Order Mahogany Company manufactures different designs of love seats. At the start, the company built a large plant with the expectation that the demand for its product will increase once the market is developed. However, at present, the company utilizes only 70% of its plant capacity. An account executive received an offer from a large hotel chain to purchase 150 units of love seats for a price of P9,500. Normal selling price for these seats is P15,000 each. Manufacturing costs for the current period's production of 350 love seats are presented below. Fixed cost is expected to be unchanged with the acceptance of the order. Production Costs for 350 Units Materials P1.225.000 Labor 1,050,000 Factory Overhead (40% fixed) 1,400,000 The account executive's commission for this order is 2096. 1. Should the special order be accepted? 2. Will your answer change if the account executive's commission is computed at P1,000 per love seat