Metalex Roofing Ltd manufactures roofing sheets whose normal selling price is GH¢20 per sheet. The variable cost of producing the product is GH¢8. A foreign distributor has offered to purchase 3,000 sheets for GH¢10 per sheet. This is a one-time order that would not affect the company's regular business. The annual capacity is 10,000 sheets, but Metalex is currently producing and selling only 5,000 sheets. Fixed costs are unaffected by the order. a. Should Metalex accept the offer? b. Assuming Metalex has no spare capacity and the order will result in a loss of production of 300 sheets. Should the order be accepted?

Metalex Roofing Ltd manufactures roofing sheets whose normal selling price is GH¢20 per sheet. The variable cost of producing the product is GH¢8. A foreign distributor has offered to purchase 3,000 sheets for GH¢10 per sheet. This is a one-time order that would not affect the company's regular business. The annual capacity is 10,000 sheets, but Metalex is currently producing and selling only 5,000 sheets. Fixed costs are unaffected by the order. a. Should Metalex accept the offer? b. Assuming Metalex has no spare capacity and the order will result in a loss of production of 300 sheets. Should the order be accepted?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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