PLEASE SHOW ALL WORKING.

Question 1:

Moka Golf Club produces golf balls and sells them to its members at a price of $ 7 each. The cost to produce 20,000 golf balls is as follows:

Materials $ 10,000

Labour $ 24,000

Variable Overheads $ 20,000

Fixed Overheads $ 50,000

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$ 104,000

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The Club has received a request to supply 4,000 balls to a foreign entity at a price of $ 5.00 each. If Moka accepts the offer, its Fixed Overheads will increase by $ 5,000 because it will have to purchase additional equipment.

Required:

1. Prepare an incremental analysis for this Special Order. 8 Marks
2. Advise Moka as to whether they should accept the order. 2 Marks