A CowFarm distribution centre has production capacity of 50,000 crates of ready meals (units) but in the next month sales volume is expected to be 35,000 units at a selling price of 40. Expected costs and revenues for the next month at an activity level of 35,000 units are:

Dir Lab 12420,000

Dir Mats 8 280,000

Var Manufacturing ohds 2 70,000

Fixed Manufacturing ohds 8 280,000

Marketing and Distribution 3 105,000

Total costs 33 1,155,000

Sales 40 1,400,000

Profit 245,000

A new once off customer has offered to purchase 3,000 units next month at 20 a unit but requires their company logo to be attached to every product at an anticipated cost of 1 per unit. They will collect these crates from the distribution centre hence there will be no additional marketing or distribution costs. Currently labour is under utilised.

You are Required to:

Complete the schedule as per below and advise whether the centre should accept or reject the offer.

Do NotAccept Difference

Accept Order(Relevant Cost)

Units35,000

Dir Lab12 420,000

Dir Mats 8 280,000

Var Manufacturing ohds 2 70,000

Inserting Logo 10

Fixed Manufacturing ohds 8 280,000

Marketing and Distribution 3 105,000

Total costs33 1,155,000

Sales 40 1,400,000

Profit 245,000