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: Should the company accept / reject the order? Keeping in view the above answer narrate rationale to support your answer
Question No. 1-1
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
Variable (material labor and
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:
- Should the company accept / reject the order?
- Keeping in view the above answer narrate rationale to support your answer
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