5. Mr \& Mrs. Ayurvedic Company produces the Boroshine, Antiseptic Ayurvedic Cream. The maximum capacity of the company is 10,000 units in a year. The company is selling the products at a price of Rs 50 per unit. The company appoints salespersons who get a commission of Rs 5 per unit. The company pays a monthly rent of Rs 5,000 . Further, the company recriti accounting records and, _.. . Livin Ks 5000 per month each. The projections for the current year are as follows: - Sales Rs 4,00,000 - Cost of goods sold ( 80% variable) Rs 90,000 - Corporate tax rate 30% of the profit a) The company gets a once-only special order for producing 3,000 units of Ayurvedic Creams from the Child Care company. The offer is to be accepted or rejected in total. The company will not pay a sales commission on this order. However, if the company starts working at 100% capacity, the fixed costs will increase by 10%. You are asked to carefully examine the nature of operating costs of the Mr&Mrs. Ayurvedic Company and estimate the minimum acceptable price for this special order. Show your calculations clearly. b) For the next financial year, the company projects that things will remain unchanged, and the company will continue to operate at 80% capacity utilization. However, if prices are reduced to Rs 48 per unit and the salespersons are given a commission of Rs 6 per unit, the company can produce and sell units at 100% of its capacity. The fixed cost will increase by 10% if capacity utilization increases from 80% to 100%. Will you advise the company to move to 100% of its capacity next year? Show your calculations clearly. [10+10=20]