A special order has been received from abroad for 500 litres of Mixed Fruit Juice (MFJ) to be delivered during November 2021. Fresh Juice (Pty) Ltd has sufficient spare capacity to produce the order, in addition to its normal production for the local market. It therefore will be able to sell the extra Orange juice that results from producing Mixed Fruit Juice but it will not be able to sell any further quantities of pulp as the market is saturated and will remain saturated for many months to come. The foreign customer is willing to pay R5 per litre of MFJ. The acceptance of the special order will not affect local market prices. The joint processing costs consist of 50% variable costs and 50% fixed overhead costs and will remain the same during November as they were in April. The further processing costs of MFJ consist of 80% variable costs and 20% fixed costs, and will also remain the same as they were in April. The further processing costs of pulp are all variable and will also remain the same. The joint costs are allocated based on the Net Realisable Value Method. YOU ARE REQUIRED TO: (a) Based on profit and loss calculations, advise Fresh Juice (Pty) Ltd whether to accept the special order or no.

Answer rating: 100% (QA)

b Assume that the special order is accepted Advise Fresh Juice P... View the full answer