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Sangkar Biru Sdin Bhd makes small bird houses that sells at RM32.00 each. The company's level of production and sales is 145,000 units. The company
Sangkar Biru Sdin Bhd makes small bird houses that sells at RM32.00 each. The company's level of production and sales is 145,000 units. The company has a pre-tax income of RM1, 620,450 . In addition to RMS30,500 of fixed manufacturing overhead and RM169,050 of fixed administrative expenses, the following per unit costs as in Table 02 have been determined for each bird house. Table Q2: Cost Information for One Unit Bird House The company has received an offer from a Singaporean company to buy 6,000 bird houses at RM28.00 per unit. The new per unit variable selling cost of the additional units will be RM3.00, and RM24,000 of fixed administrative cost will be incurred. The sale would not affect the domestic sales or their cost. Analyse whether Sangkar Biru should accept this offer. (12 marks)
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