3. The following information is available for 70% capacity utilization (7000 units). Particulars Amount (in Rs) Direct materials 350000 Direct labour 210000 Direct expenses 140000 ----------- Total cost of variable expenses 700000 Fixed admn expenses 200000 Fixed selling expenses 200000 ----------- Total cost of manufacture 1100000 ----------- Calculate marginal cost under the following two scenarios - (a) when the capacity increases to 80% assuming, no change in fixed cost. The selling price offered is Rs 120. Ananlyse and recommend (b) When the fixed costs increase to 90%, both the fixed costs increase by 15%. Should the company accept an order at a selling price of Rs 175 per unit? (c) If the order is accepted, what is the profit or loss on the incremental capacity under both scenarios?