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solution for Abby Sdn Bhd (ASB) is selling handmade songket from Terengganu. Recently the company receives a special order from Malibu Enterprise to produce special
solution for Abby Sdn Bhd (ASB) is selling handmade songket from Terengganu. Recently the company receives a special order from Malibu Enterprise to produce special songket with specific pattern and colour that reflect their corporate image. Consequently, this requirement has increased the variable costs by RM15 each. In addition, they also want the songket to have their company's logo. This will require a special stamping machine that cost RM15,000. This machine has no other use after completing the order. Malibu Enterprise asks for 300 pieces of songket with a special price of RM280 each. Information related to normal production is as follows: Total production capacity 1000 pieces per month Normal production 600 pieces per month Selling price RM350 per piece Variable cost RM155 per piece Fixed cost RM28,000 per month REQUIRED: (a) Evaluate the special order received from Malibu Enterprise and advise whether ASB should accept the order, or not. (5 Marks) (b) Provide TWO (2) reasons why you would consider the above order as a special order? (2 Mark)
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