Fruita Vitals Plc plans to produce a new drink based on fruit and yoghurt called Stream. It is anticipated that variable costs will amount to PKR *37 per drink. The company will produce Stream in a processing facility with a capacity to produce 400,000 drinks a year. Fixed costs are anticipated as being PKR165,000 per year. The company plans to supply to retailers at a price of PKR 100 per drink.

Required: A major health food chain has approached Fruity plc to ask if the company would be willing to provide 100,000 drinks in the forthcoming year at a price of PKR 25 per drink. The company will only accept 100,000 drinks. Assume that the company has finalized production and sales plans for the year at a price of PKR 100 and a volume of 360,000 drinks.

Required: e) Assess whether Fruity Plc should accept this special order and calculate the companys profit if the order is accepted.