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.
(b) Discuss TWO (2) qualitative factors that MFSSB should include in the analysis of
the special order.