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QUESTION 3 (20 Marks) The company receives a special long term contract order from an African country to buy 100,000,000 pieces of glove at RM
QUESTION 3 (20 Marks) The company receives a special long term contract order from an African country to buy 100,000,000 pieces of glove at RM 0.50 per piece every month. The company produces 3,000,000,000 pair of gloves in 2019 with the total costs of RM 1,444,264,000. The total revenue collected on the sales of gloves was RM 2,131,809,000. The cost structure in the manufacturing of globe is as follow: RM Raw materials 0.34 Revenue 2131808000 teft 264000 Wages and salaries 0.10 Rental and utilities 0.01 profit Depreciation and amortization 0.02 Other operating overheads 0.01 Total 0.48 Required: The board is considering the offer to sell the gloves to this African country. a. You have been asked to advise the board whether the order should be accepted? (5 Marks) b. What are the other considerations that must be taken in the decision? (5 Marks) c. If all the plant capacity has been used up, what will be the opportunity cost of taking this order? (5 Marks) d. Based on the above situation, should the order be taken? Why? (5 Marks) 7
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