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please answer questions a& b Green Life Sdn Bhd manufactures and supplies hair conditioner to various retail outlets. The normal retail price of the product,
please answer questions a&b
Green Life Sdn Bhd manufactures and supplies hair conditioner to various retail outlets. The normal retail price of the product, packed in 500 ml bottle, is RM45 per bottle. The full production capacity per month is 10,000 bottles. The current production is equivalent to the normal capacity which is at 85% of the full capacity. The cost of producing one bottle of hair conditioner is as below: Direct material Direct labour Production overheads Selling overheads Total RM 4.60 8.40 8.50 2.80 24.30 40% of the production overheads are variable and the remaining are fixed. Included in the selling overheads are sales commissions of 3% of the normal selling price. The sales commissions are paid to the salesmen only when products are sold to the retail outlets. The remaining selling overheads are fixed. Recently, Green Life Sdn Bhd has received a special order from Tisya Toiletries to supply them with 1,500 bottles of hair conditioner. Tisya offers to pay RM35 per bottle. There will be no sales commission to be paid for this special order. Required: a. Determine the total profits for Green Life Sdn Bhd (including normal sales and special order sales) if it accepts the special order from Tisya Toiletries. b. Assume that Tisya Toiletries is requesting for 3,000 bottles for the special order. Tisya Toiletries is also requiring a special label on each of the bottle that costs RM0.75 each. The price of the product under the special order will be increased by RM0.50 per bottle. Using the incremental analysis, advice whether Green Life Sdn Bhd should accept or reject this special orderStep by Step Solution
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