BarbieSport Sdn. Bhd. is a company specialising in manufacturing sport shoes. The following are the production costs relating to the normal production of 8,000 pairs which represents 80% of the company's maximum production capacity. The current selling price for the normal production is RM45.

Description

RM

Direct material per unit 10

Direct labour per unit 6

Variable selling and distribution per unit 1

Variable packaging per unit 0.20

Factory rent 6,000

Depreciation 10,000

Supervisor salary 7,000

Barbie Tingz Sdn. Bhd. has recently approached BarbieSport Sdn. Bhd. to purchase 3,000 pairs of shoes at RM40 per pair. If the company accepts the order, the company can eliminate the variable selling and distribution cost, as well as packaging expenses.

Barbie Tingz Sdn. Bhd. requests special logo to be made on the shoes that requires BarbieSport Sdn. Bhd. to rent a special machine which costs RM25,000 and incur the cost of designing the logo of RM0.50 per pair.

(a)Calculate the additional profit and loss from the special order.

(b)Advice whether BarbieSport Sdn. Bhd. should accept or reject the special order.

(c)If Barbie Tingz Sdn Bhd orders 2,000 pairs of shoes, which is within Barbie Sport Sdn Bhd's capacity, what is the new additional profit or loss from the special order, and advice whether Barbie Sport Sdn Bhd should accept or reject the order.