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help me to solve this plz Mallett plc has the following income and statement based on absorption costing principles: Product: Direct Materials Direct Wages Production

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Mallett plc has the following income and statement based on absorption costing principles: Product: Direct Materials Direct Wages Production overheads (fixed) Gross Margin Selling & admin overheads: Variable Fi Xed Net profit E000s 320 190 90 so 100 250 230 so 130 40 40 50 tooos 450 150 180 90 30 30 40 Total sooos 1,930 600 3SO From the above information, thc Managing Director has suggested that the company discontinues product r. This mean Will Spare in the factory but the Suggests there is no point in using resources to make a product which is making a loss. the company has been approached by a local school Which is interested in Mallett producing a special "one.otr order for them. but would like the price to be kept as low as possible. The company could undertake the order if i! stopped producing product T. Thc new order would need the existing direct labour used for product T and would also use E60.OOO Of direct nutcrials. The order could be produced on the existing machines in the factory, apan frotn one special machine that would need be hired costing There would be no selling costs i 'E urrcd, Required: Re-dran the above information iO provide a more useful statement and consider the various options available to Mallett plc. You should include a calculation Of the minimum price which lhe new order could be sold to the local school.

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