Kilang Merah involves in making bottled fruit juices called Maniss. Currently, the factory is operating below its full capacity. Below is the financial result for year

2020:

RM RM

Sales (18,000 bottles) 27,000

Variable production cost 10,800

Fixed production cost 4,500

Total production cost 15,300

Selling cost 4,000

Total cost 19,300

Net profit 7,700

A direct seller offered to purchase 7,000 bottles of Maniss at RM0.90 per bottle. The management is unwilling to accept the order because it is not only below the selling price but also below its production cost per unit.

(a) Determine whether the company should accept or reject the order of Maniss. Show your computations. (5marks)

(b) Explain the relevant qualitative factors that need to be considered when

making decision on whether to accept or reject the special order for Maniss.

( 5 )

( Total / Jumlah: 20 )