Malik started a travel luggage company selling only one style of luggage. It has just completed its first year of trading. The summary profit and loss account for the year is set out below: £ £ Sales (20,000 units) 1,280,000 Less: Direct Costs Direct Material 360,000 Direct Labour 320,000 Direct Expenses 80,000 Less: Fixed Expenses Overhead cost 541,000 1,301,000 Net Loss 21,000 The following information is available: all of the direct costs are variable with production the production overhead figure does not vary with the output. A) special order was received at last minute to supply 5,000 units at a price of £60. Should the company accept this special order? Explain your answer using appropriate calculations
Malik started a travel luggage company selling only one style of luggage. It has just completed its first year of trading. The summary profit and loss account for the year is set out below: £ £ Sales (20,000 units) 1,280,000 Less: Direct Costs Direct Material 360,000 Direct Labour 320,000 Direct Expenses 80,000 Less: Fixed Expenses Overhead cost 541,000 1,301,000 Net Loss 21,000 The following information is available: all of the direct costs are variable with production the production overhead figure does not vary with the output. A) special order was received at last minute to supply 5,000 units at a price of £60. Should the company accept this special order? Explain your answer using appropriate calculations
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Malik started a travel luggage company selling only one style of luggage. It has just completed its first year of trading. The summary
|
|
£ |
£ |
|
Sales (20,000 units) |
|
1,280,000 |
|
Less: Direct Costs |
|
|
|
Direct Material |
360,000 |
|
|
Direct Labour |
320,000 |
|
|
Direct Expenses |
80,000 |
|
|
|
|
|
|
Less: Fixed Expenses |
|
|
|
|
541,000 |
1,301,000 |
|
Net Loss |
|
21,000 |
The following information is available:
- all of the direct costs are variable with production
- the production overhead figure does not vary with the output.
A) special order was received at last minute to supply 5,000 units at a price of £60. Should the company accept this special order? Explain your answer using appropriate calculations
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