(3) a) Define marginal cost. Discuss the importance of identifying the difference between relevant costs and irrelevant costs. (05 marks) b) A factory produces 1000 units of product 'X' for home consumption at the following costs. (Rs.) Costs 40,000 36,000 Direct Materials Direct Labour Factory overhead Fixed Variable 12,000 20,000 32,000 Administration Overhead Fixed Variable Total Cost 10,000 16,000 26,000 134,000 The domestic market can consume only 1000 units at a selling price of Rs.155/=. The foreign market for this product can however, consume additional 4000 units if the price is reduced to Rs.125/=. Is the foreign market worth trying? Justify your answer with relevant calculation. (05 marks) c) What factors should managers consider before deciding to accept or reject a special order? (05 marks) d) From the following information calculate the selling price of a unit of product 'A'. Rs. Fixed cost per annum 60,000/= Unit variable cost 10/= Expected profit 30,000/= Existing sales - 8000 units (05 marks)