50,000 Boxes Rs. 50,00,000 The Kathmandu Soap and Chemical Company produces and sale toilet soap. The income statement at two different level of activities are summarised below: Sales in Boxes Sales Revenue Less: Cost 1,00,000 Boxes Rs. 1,00,00,000 Direct Materials Direct Wages Manufacturing Overhead Rs. 10,00,000 Rs. 5,00,000 Rs. 25,00,000 Rs. 20,00,000 Rs. 10,00,000 Rs. 35,00,000 Depreciation Sales Commission Rs. 5,00,000 Rs. 5,00,000 Administration and Others Rs. 1,00,000 Rs. 5,00,000 Rs. 10,00,000 Rs. 1,00,000 The sales for 1983 was 75,000 boxes and which was only 75% of the capacity available. On January1, 1984 the Kathmandu Hotel P. Ltd. approach the company with the special offer to supply 20,000 boxes of special brand toilet soap at Rs. 65 per box. The soap was to bear special hotel monogram and was to have appellant fragrance to the taste of hotel guest. No sales commission is required to pay for special offer. The special device to print hotel monogram will cost additional Rs. 2,00,000 and special fragrance will increase the material cost by Rs. 1 per box. All other fixed cost and material cost remain unchanged. Required: Should the company accept this special offer? [Ans: Accept special offer, profit increase by Rs. 80,000]