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Question 5 (12 marks) Mask Company manufactures face masks with the following per unit cost: Direct materials Direct labour Manufacturing overhead Selling expenses Administrative
Question 5 (12 marks) Mask Company manufactures face masks with the following per unit cost: Direct materials Direct labour Manufacturing overhead Selling expenses Administrative expenses $4 $2 $1 $5 $4 Mask Company expects to produce and sell 60,000 face masks this year for $20 each. Mask Company's maximum production capacity is for 100,000 units. Recently, a company called Face Company approached Mask Company about buying 20,000 face masks for $15 per unit. If Mask Company accepts this special order, selling and administrative activities will not be affected. Required: 1. What will be the profit earned by Mask Company on the 60,000 units it expects to produce and sell? 2. Should Mask Company accept Face Company's special order? Provide detailed calculations to support your explanations. 3. List and explain three qualitative factors that should be considered by Mask Company before accepting this special order. (3+6+3=12 marks)
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