LMTC Ltd manufactures PE clothes for primary schools in Northamptonshire, the United Kingdom. The company produces 30,000 units per academic session. The following is the cost per unit:

It has been established that £16 of the overhead is fixed. Kids Jump Ltd has offered to sell 30,000 units of the PE clothes to LMTC Ltd for £46 per unit. If LMTC Ltd accepts the offer, some of the facilities presently used to manufacture the PE clothes could be leased to a third party and would generate a revenue of £65,000 per academic session. Additionally, one-fourth of the fixed overhead cost incurred in PE clothes production would be totally eliminated.

Required

a. Should LMTC Ltd accept or reject the offer from Kids Jump Ltd?
b. What other factors do managers consider in accepting or rejecting of investment decisions?

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Direct materials Direct labor Variable overhead Manufacturing overhead Total £ 6 8 12 24 50