Question
MFS Sdn Bhd (MFSSB) manufactures sports attire. The capacity of the production is 5,000 units each month. Currently, the normal production is at 75%. The
MFS Sdn Bhd (MFSSB) manufactures sports attire. The capacity of the production is 5,000 units each month. Currently, the normal production is at 75%. The price for one suit of sport attire is RM175. Below are the costs incurred for the 75% current activity level: Variable costs: Amount Direct material RM131,250 Direct labor RM187,500 Marketing RM93,750 Total variable costs RM412,500 Fixed costs: Amount Manufacturing RM137,500 Marketing RM87,500 Total fixed costs RM225,000 Last week, MFSSB receive an order from a new customer for 1,250 units of sports attire with the price of RM100 per unit. For this order, no variable marketing costs will be incurred. REQUIRED: (a) Determine whether MFSSB should accept the special order. Show all workings. (6 Marks) (b) Determine whether MFSSB should accept the special order's price of RM100. Show all workings. (2 Marks) (c) Discuss TWO (2) qualitative factors that MFSSB should include in the analysis of the special order. (2 Marks)
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