Super Small Pty Ltd is a manufacturer of children's clothing and has been approached to supply a special order for 10 000 designer shirts at a price of $12 per shirt. The variable costs of producing a shirt are $8 per shirt. Super Small Pty Ltd has sufficient spare capacity to manufacture the order without affecting its normal production and the order is within the relevant range so there will be no impact on fixed costs. Should Super Small Pty Ltd accept the order?

Select one:

a.Yes, as profits will be increased by $40 000.

b.There is insufficient information to tell whether Super Small Pty Ltd should accept the order or not.

c.Yes, as fixed costs will not change.

d.No, as the price being offered of $12 per shirt is not sufficiently above the full cost of production of $8 per shirt.