09:10 mdx.mrooms.net - Private Question-3 Eagle Plc. has a capacity to produce 8,000 machines per year, which is the total market demand. Current production and sales are 6,500 machines per year. The company has a Selling Price of 150 per machine. The following are the cost information for the current activity level: Items. Particulars Original Actual Expenditure Expenditure 130,000 195,000 1 WWWN 3 (a) 3 (b) 4 Direct Materials Direct Wages Factory Overheads: Fixed Variable Setup costs that vary with the number of batches of production Total costs: => 150,000 65,000 13,000 553,000 To derive the Actual Expenditure for items 1 to 4 take the original expenditure plus the last three digits of your student number. Eagle Plc. makes machines for its existing customers in batch size of 50 machines per batch. A new customer is willing to place a one-time special order of 2,000 machines at a discounted price of only 120 per machine. The special order has to be accepted in full or rejected totally. Direct labour is employed on zero contract hours and is not paid for idle time. Requirement - You must work on the new student number based variables: Applying relevant costing principles discuss whether to accept the special order or not. Answer this question based on a statement showing relevant profits / losses. Stating your reasons and all assumptions. Show all necessary notes, formula and workings. (25 marks) [Total 25 marks] > 5 09:10 mdx.mrooms.net - Private Question-3 Eagle Plc. has a capacity to produce 8,000 machines per year, which is the total market demand. Current production and sales are 6,500 machines per year. The company has a Selling Price of 150 per machine. The following are the cost information for the current activity level: Items. Particulars Original Actual Expenditure Expenditure 130,000 195,000 1 WWWN 3 (a) 3 (b) 4 Direct Materials Direct Wages Factory Overheads: Fixed Variable Setup costs that vary with the number of batches of production Total costs: => 150,000 65,000 13,000 553,000 To derive the Actual Expenditure for items 1 to 4 take the original expenditure plus the last three digits of your student number. Eagle Plc. makes machines for its existing customers in batch size of 50 machines per batch. A new customer is willing to place a one-time special order of 2,000 machines at a discounted price of only 120 per machine. The special order has to be accepted in full or rejected totally. Direct labour is employed on zero contract hours and is not paid for idle time. Requirement - You must work on the new student number based variables: Applying relevant costing principles discuss whether to accept the special order or not. Answer this question based on a statement showing relevant profits / losses. Stating your reasons and all assumptions. Show all necessary notes, formula and workings. (25 marks) [Total 25 marks] > 5
