next year, but, if it is undertaken, there will be no profit from such customers. The estimated costs of producing colour catalogues of a specialised nature are given below. The costs below are considered certain with the exception of the direct materials price. Cost data: Estimated fixed costs per annum: Required: (a) Tabulate the costs and profits per unit and in total and the annual profits, assuming that the contract orders in the year are: (i) 40,000 , (ii) 50,000 and (iii) 60,000 catalogues, at a direct material cost of R45.00 per catalogue. Comment on the tabulation you have prepared. (10 marks) (b) Calculate the expected profit for the year if it is assumed that the probability of the total order is: 0.4 for 40,000 catalogues 0.5 for 50,000 catalogues 0.1 for 60,000 catalogues and that the probability of direct material cost is: 0.5 at R45.00 per catalogue 0.3 at R50.00 per catalogue 0.2 at R55.00 per catalogue. (6 marks) (c) Discuss the implications for Seeprint Proprietary Limited of the acceptance or rejection of the contract with the important customer. (6 marks) Adapted from ACCA Level 2 Management Accounting