Activity 5.3 Due to industrial depression, a plant is running at present at 50% of its capacity. The following details are available. Cost of production per unit Rs Direct materials 20 Direct labour 10 Variable overhead 30 Fixed overhead 28 20 Production per month Total cost of production Sales Loss: 80 20,000 units Rs 1,600,000 Rs 1,400,000 200,000 An exporter offers to buy 5,000 units per month at the rate of Rs65 per unit and the company hesitates to accept the offer for fear of increasing its already operating losses. Required: (a) Advise whether the company should accept or decline this offer. (4 marks) (b) Comment on four factors other than costs which the company should take into consideration in evaluating such decision. (6 marks)