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The HASF Company has an annual plant capacity of 50,000 units. Predicted data on sales and costs are given below.
Sales (50 per unit) 1,000,000
Manufacturing cost
Variable (material labor and overhead) 40 per unit
Fixed overhead 30,000
Selling and administrative expenses
Variable (sales commission RS 0.5 per unit) 2 per unit
Fixed 7,000
A special order has been received from outside for 5,000 units at a selling price of 45 per unit this order will no effect on regular sales. The usual sales commission on this order will be reduced by one half.
Required:
Problem a. Should the company accept / reject the order?
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