Fountain Pens Limited "In fact we shall be out of business if we dare accept such deal. The accounting figures cannot be wrong! Although I support the charitable campaign for which the order will serve but to remain in business, we cannot sell below..." James Cocker, General manager Fountain pens Ltd specializes in pen production and designs. The company was formed in 2003 and has in recent years seen a rise in the demands of its product. A remarkable feature of the company is its unique design of pens to meet the specifications of the customers. They also make pens for various charities, public sector organizations and high street retail shops. The following details relate to the income statement of Fountain Pens Ltd for the year ended December 31,2003 Particulars N'm Turnover 65000 Less: COGS 61500 Gross Profit 3500 Less: Selling and distribution expenses 3200 Operating Profit 300 (Nigerian currency is denominated in Naira(N) and Kobo(K). one hundred kobo equals one Naira) The company's fixed costs were N34.5 million and its fixed selling and administrative cost were N1.5 million. The company uses local sales agents to sell its product. During the financial year, about 1% of its turnover was paid as commission to agents; these are included in the selling expenses. During the year, 100000 pens were produced and sold