2. Groggs Limited "(Groggs") operates a wholesale bakery in Northern England and is currently operating at 80 percent capacity. The Income Statement shows the following data: '000 Sales Less: Cost of Sales Direct material 240 Direct Expenses 80 Variable Overheads Fixed Overheads 60 320 Profit '000 800 700 100 The Managing Director has been discussing an offer of a contract from South Wales, which will utilize 50 percent of the maximum capacity of the factory. The proposed price is 10 percent less than the current price that Groggs obtains. The factory capacity can be increased by 10 percent at an increased fixed cost of 30,000.