Question No 3. (20 Marks) Printech Company print elaborated, high-quality color brochures in its facility, located in Faisalabad, Pakistan. It primarily served businesses in the Urban Sindh, although it did have some clients in south Punjab and as far east as the Gawadar Bay. Production at its Faisalabad facility was running at around full capacity: 150,000 brochures a month. Junaid owned and managed the company. He employed one sales representative and one printing-press operator, although he frequently relied on temporary labor to help in the printing process as needed to accommodate any changes in printing volume. Junaid believed that many of his costs were fixed, but that some costs varied with the number of brochures he printed and sold. Table 1 contains information related to Printech's monthly operating costs for the company's current activity level of 150,000 brochures a month. The company typically priced its printing services at an average of 17 PKR per 100 brochures printed. Historically, Junaid had encountered little variation in pricing from job to job, although occasionally special situations did arise. He wondered how he should handle those special situations. He did not have a "rule of thumb" he could apply, but he wished he could find one. Table 1 PRINTECH COMPANY (A) Summary of Monthly Operating Costs Monthly costs at 150,000 volume Manufacturing costs: Direct material (variable) 6,000 Direct labor (variable) Direct labor (fixed) Manufacturing overhead (variable) Manufacturing overhead (fixed) 3375 Total manufacturing costs 15.375 Nonmanufacturing costs: Sales (variable) Sales (fixed) Corporate (fixed) Total nonmanufacturing costs Total costs 1500 3000 1500 1500 1875 3750 7125 22,500 PKR The Special Order In her phone call, Jamila indicated that she needed a special job printed next month. She needed 25,000 brochures, concerning a new product, to distribute at three trade shows she was planning to attend. When Junaid quoted Jamila the usual price of 17 PKR per 100 brochures, she sighed. "Junaid, I know that Printech does a high-quality job, but I'm short on funds right now because I have spent so much on getting this new product up and running. I can't go any higher than 10 PKR per 100 brochures on this job. If you can't do it for that, I'll have to go to someone else. I'm sure the brochures won't look as nice, but that's all I've got to spend