ThinkerGifts makes handcrafted cups for corporate events, whixh are sold for RM400 per cup. The cost of materials for each cup comes to RM100. Part-time workers, paid RM50 per hour, help to craft the cups. Each cup requires 4 labour hours. ThinkerGifts overhead costs amount to RM10,000 per month. Currently, ThinkerGifts produces 50 cups per month, but it has excess capacity and is able to produce 100 cups per month. A large firm wants to order 25 cups for a special price of RM350 per cup. Mr. Tee Kup, the owner of ThinkerGifts, is wondering if he should accept this special order.

Required:

1. Find variable costs per cup (1 mark)

2. Find the contribution margin, based on the normal price of RM400 per cup. (1 mark)

3. Find the contribution margin, based on the special price of RM350 per cup. (1 mark)

4. Should ThinkerGifts accept this order? Justify your answer, based on the relevant financial considerations. Hint: refer to c. above (2 marks)

Should ThinkerGifts accept if there is no excess capacity? You may decide that ThinkerGifts may accept this order, or