The following is extract of the Income statement of Powerbest Bhd. Revenue Less Variable Costs Contribution...

 

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The following is extract of the Income statement of Powerbest Bhd. Revenue Less Variable Costs Contribution Margin Less Fixed Costs (Overheads) Operating Profit Less Taxation @24% Profit after tax RM12,345,550.00 RM8,645,230.00 RM3,700,320.00 RM1,425,500.00 RM2,274,820.00 RM545,956.00 RM1,728,863.32 RM29.75 RM20.83 RM8.92 RM3.43 RM5.48 RM1.31 RM4.17 The company is selling a special power bank at an average price of about RM30.00. A new customer from Rwanda is interested to order 200,000 pieces of the power banks per month for the next 12 months. The company can produce 1,000,000 pieces of power bank a month and they are only producing about 415,000 units per month now. Required: However, the Rwanda's customers only willing to pay RM23 a piece for the power bank. The company needs to spend on shipping and other logistic costs of around RM220,000 per annum on delivery of the power banks. a. Should the company accept the order? Show your workings. (5 Marks) b. What are the qualitative considerations in considering the order? (5 Marks) c. What will be the minimum price that the company must have in order to consider a special order? (5 Marks) A+ The following is extract of the Income statement of Powerbest Bhd. Revenue Less Variable Costs Contribution Margin Less Fixed Costs (Overheads) Operating Profit Less Taxation @24% Profit after tax RM12,345,550.00 RM8,645,230.00 RM3,700,320.00 RM1,425,500.00 RM2,274,820.00 RM545,956.00 RM1,728,863.32 RM29.75 RM20.83 RM8.92 RM3.43 RM5.48 RM1.31 RM4.17 The company is selling a special power bank at an average price of about RM30.00. A new customer from Rwanda is interested to order 200,000 pieces of the power banks per month for the next 12 months. The company can produce 1,000,000 pieces of power bank a month and they are only producing about 415,000 units per month now. Required: However, the Rwanda's customers only willing to pay RM23 a piece for the power bank. The company needs to spend on shipping and other logistic costs of around RM220,000 per annum on delivery of the power banks. a. Should the company accept the order? Show your workings. (5 Marks) b. What are the qualitative considerations in considering the order? (5 Marks) c. What will be the minimum price that the company must have in order to consider a special order? (5 Marks) A+

Answer rating: 100% (QA)

a Should the company accept the order Show your workings 5 Marks In order to determine whether or not the company should accept the order calculations need to be conducted to assess the financial viab... View the full answer