The following financial data apply to the videotape production plant of Sinamu Company for October 2013. b) Budgeted Manufacturing cost per Videotape Sh.160 90 70 100 Sh.420 Direct materials Direct manufacturing labour Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing cost Variable manufacturing overhead varies with a number of units produced. Fixed manufacturing overhead of Sh.100 per tape is based on budgeted fixed manufacturing overhead of Sh.15 million per month and budgeted production of 150,000 tapes per month. The Sinamu Company sells each tape for Sh.500. Marketing costs have two components . Variable marketing cost (sales commissions) at 5% of revenues. Fixed monthly costs of Sh.6.5m monthly. During October 2013, Lyn Kivusyo, a Sinamu Company sales person, asked the CEO for permission to sell 1,000 tapes at Sh.400 per tape to a customer not in Sinamu's normal marketing channels. The CEO refused this special order because the selling price was below the total budgeted manufacturing costs Reguired: (i) What would have been the effect on monthly operating income of Gii) Comment on the CEO's "below manufacturing costs" reasoning for (iii) What other factors should the CEO consider before accepting or rejecting accepting the special order price? rejecting the special order. the special order? (5 Marks) (5 Marks) (5 Marks) Page 2 of 3