Need help structuring answer.

Q- A company from overseas order 3000 tables with a price of $ 200. Fantastic has the capacity to produce this offer. As the senior management accountant, please provide a recommendation whether Fantastic Ltd should take this offer. Explain your recommendation and show how it will affect the budgeted profitability and cash flow (5 marks)

Points of answer-

-Although it is stated that Fantastic Ltd has the capacity to produce 3,000 tables

- To determine a more accurate cost figure, an activity-based costing system (ABC) is usedtocompareto the traditional approach.

-Even though the ABC method can in cases provide a more accurate figure, in the case of fantastic is seems that the method under costs the product. This is evident as ABC shows the COGSat $214 however it is know that at a selling price of $350 per unit the business is makinglosses, there for the traditional costing method is more accurate which shows a COG of $355.44

-Respective of the costing method Fantastic Ltd choses to employ the comparison table shows that either way of costing the item is more than the $200 price per unit proposed in the deal.

A full computation has shown that the total variable cost $702,441.18 to produce 3000 units far exceeds the proposed revenue $600.000. Thus, the contribution is NEGATIVE $102,441.18. Therefore, the order should be REJECTED.