Alpha Ltd manufactures and sells a fan heater. At the current level of output of $15,000$ units, the required direct material is $8$ per unit and direct labour is $10$ per unit, annual fixed costs are $45,000$ and unit selling price is $25.$

Last week, a new customer approached the Company for a one$-$time special order of $3000$ units of its product for $23$ each. The company realize that they have reached maximum production capacity and in order to meet this special order, they need to expand their capacity. This expansion will incur additional fixed costs of $5,000$ while other costs would remain unchanged. This expansion has also some negative impacts on environment and employees$$ health and wellbeing.

Required: $-$

As the management accountant of Alpha ltd$,$ you are required to write a report to Chief Financial Officer $($CFO$)$ presenting annual net profit, break$-$even point and margin of safety based on the current level of output and comment on your results. Likewise, using your management accounting knowledge and incremental profit analysis, appraise the offer of the new customer in deciding whether to accept or reject the one$-$time special order $($include all relevant calculations$).$ Your report to directors should take into consideration the financial as well as non$-$financial factors.