City Sports is a manufacturer of clothing that sells its output to clothing retailers. One of its departments manufactures jumpers, a sports wear. The department has a production capacity of 50,000 jumpers per month. One of its major customers has gone into receivership resulting in an excess capacity. For the next quarter current monthly production and sales volume is expected to be 35,000 jumpers at a selling price of $ 40 per jumper. Expected costs and revenues for the next month at an activity level of 35,000 jumpers are as follows: Direct labour Direct materials Variable manufacturing overheads Manufacturing non-variable overheads Marketing and distribution costs Total costs Sales Revenue Profit $ 420,000 280,000 70,000 280,000 105,000 1,155,000 1,400,000 245,000 City Sports is expecting an upsurge in demand and considers that the excess capacity is of temporary nature. A company in the leisure industry has offered to buy for its staff 3000 jumpers each month for the next three months at a price of $ 20 per jumper. The company would collect the jumpers from City Sport's factory and thus no marketing and distribution costs will be incurred. No subsequent sales to this customer are anticipated. The company would require its company logo to be inserted on the jumper and City Sport has predicted that this will cost $1 per jumper. REQUIRED Should City Sports accept the offer from the Company? [12 marks]