Please show working out

Expert Q&A Please show working out 10.8 The 68 Company manufactures a variety of electric motors. The business is currently operating at about 70 per cent of capacity and is earning a satisfactory return on investment. international Industries (ll) has approached the mmagement of GB with an offer to buy 120.000 units of an electric motor. ll manufactures a motor that is almost identical to 63's motor. but a fire at the II plant has shut down its manufacturing operations. It needs the 120.000 motors over the next four months to meet commitments to Its regular wetomers: ii is prepared to pay 219 each for the motors. which It will collect from the GB plant. GB'e product cost. based on current planned cost for the motor. is: 2 Direct materials 5.00 Direct labour (variable) 6.00 Manufacturing overheads Tow mo Manufacturing overheads are applied to production at the rate of 18.00 a direct labour hour. This overheads rate is made up of the following components: 2 Variable factory overhead 6.00 Fixed factory overhead direct 8.00 allocated Appled manufacturing overhead rate M Additional costs ueuuly lnctrred in connection with sales of electric motors include salescommissions of 5 percent and freight expense of1.00 a unit. in determining selling prices. GB adds a 40 per cent mark-up to the product cost. This provides a suggested selling price of 28 for the motor. The marketing department. how- ever. has set the current selling price at 27.00 to maintain maket shue. The order would require additional fixed factory overheads of 15,000 a month in the form of super- vision and clerical costs. if management accepts the order. 30.000 motors will be manu- factured and delivered to II each mmth for the next four months. Remind: to) Prepare a nancial evaluation showing the impact of accepting the II order. What is the minimum unit price that the business's management could accept without reduc- ing its operating prot? (b) State clearly any assumptions contained In the analysis of (a) above and discuss any other organisational or strategic tactors that GB should consider