1. A factory currently operates at 75% capacity has the following particulars: 15,00,000 14,00,000 Sales ($) Costs: Direct Materials Direct Labor Variable overheads Fixed overheads Profit 500,000 200,000 100,000 600,000 200,000 An export order has been received that would utilize half the capacity of the factory. The order has either to be taken in full and executed at 10% below the normal domestic prices, or rejected totally. The alternatives available to the management are given below: a) Reject order and Continue with the domestic sales only, as at present; b) Accept order, split capacity equally between overseas and domestic sales and turn away excess domestic demand; Prepare comparative statements of profitability and suggest the best alternative. 2. A management consultant now spends $0.75 per k.mon taxi fares for his clients work. He is considering other transport alternatives, which include the purchase of a new small car or an older bigger car. New Small Car Item Purchase price ($) Annual Depreciation applicable ($) Repairs and servicing per annum ($) Insurance per annum ($) Petrol consumption per liter (K.m.) Petrol price per liter ($) 6,000 600 900 170 12 1.300 Old bigger Car 5,000 800 1,100 150 8 1.300 The management consultant estimates that on an average he commutes 2,000 K.m annually. a). Which of the three alternatives will be cheaper? b) If his practice expands he has to do 5,000 K.m annually. Which is cheaper