QUESTION 4

a) Alam Bakery currently able to bake 3000 units of cakes per month with 15% of capacity left. The sales price is RM90 per unit. Another company offered to buy 500 units at price of RM 40000. Calculate the maximum capacity and decide on should they accept the special order. RM

Direct material 55

Direct labor 12

Fixed overhead 5

Variable overhead 3

TOTAL COST 75

b) Explain on what will be the possible outcomes if the company reject the special order without any consideration.