13 minutes Question 3 Jaxx Ltd. produces high quality mobile phone screen protection that it sells for $4 each. At current capacity, Jaxx Ltd. can produce 50,000 screen protections a year, although Jaxx Ltd. is currently producing and selling 40,000 screen protections. The budget costs of producing and selling 50,000 screen protections are as follows: Cost per unit Total costs tof estion Direct materials $1.5 $750,000 0.5 250,000 0.3 100,000 Direct manufacturing labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses 0.6 300,000 0.3 150,000 0.2 100,000 Total costs $3.4 $1,650,000 (a) Congo Ltd. wants to place a one-time special order for 10,000 screen protections at $3 each. Jaxx Ltd. will incur no variable selling costs for this special order. Should Jaxx Ltd. accept this one- time special order? Show your calculations. (5 marks) (b) If Jaxx Ltd. is currently producing and selling 45,000 screen protections and Congo insists to order 10,000 units, on financial consideration alone should Jaxx Ltd. accept this one-time special order on 10,000 units? (10 marks) 2 . B I E SS 0 13 minutes Question 3 Jaxx Ltd. produces high quality mobile phone screen protection that it sells for $4 each. At current capacity, Jaxx Ltd. can produce 50,000 screen protections a year, although Jaxx Ltd. is currently producing and selling 40,000 screen protections. The budget costs of producing and selling 50,000 screen protections are as follows: Cost per unit Total costs tof estion Direct materials $1.5 $750,000 0.5 250,000 0.3 100,000 Direct manufacturing labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses 0.6 300,000 0.3 150,000 0.2 100,000 Total costs $3.4 $1,650,000 (a) Congo Ltd. wants to place a one-time special order for 10,000 screen protections at $3 each. Jaxx Ltd. will incur no variable selling costs for this special order. Should Jaxx Ltd. accept this one- time special order? Show your calculations. (5 marks) (b) If Jaxx Ltd. is currently producing and selling 45,000 screen protections and Congo insists to order 10,000 units, on financial consideration alone should Jaxx Ltd. accept this one-time special order on 10,000 units? (10 marks) 2 . B I E SS 0