a. Company Sproduces and sells mugs. The current monthly output rate is 800 mugs at a cost of $3,360. The cost of a mug is 5.6 USD per mug. Another firm, V., proposes to manufacture and sell 500 mugs to Company S. at a cost of $3.6 per mug .The accountant calculated that the 300 remaining mugs would cost a total of 2,000 to produce.

Should Company S accept the offer of Company V.? Show the calculations to prove your point.

b. Company P shows the following cost structure:

Number of units manufactured and sold = 1, 650

The sales revenues 23,925 USD

Total Variable manufacturing costs = 9, 982.50

Total Variable selling costs = 3,630

Total fixed costs = 15,000

1. Has the company reached its Break-even point yet?
2. If the company wants to make a profit of 2,100 USD, how many units must it sell?