Page 71 - MAC4861_2 Costing class slides part 2
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DECISION MAKING
Special Orders - Example
PF (Pty) Ltd manufactures plastic storage boxes for which the normal monthly demand is
25 500 units. The storage boxes sell at R165 each. The factory currently operates at 85%
capacity (therefore 100% / maximum capacity = 25 500 x 100/85 = 30 000 units).
The variable cost to manufacture one storage box is R68. Fixed costs amount to R304 000 per
month. Fixed cost is recovered based on the normal demand.
PF (Pty) Ltd received a special order for 6 000 units at a reduced selling price of R100 per storage
box. If this order is accepted, it has to be delivered in full within the next month.
The normal demand for this product will not be affected if the special order is accepted.
Determine whether the special order should be accepted or not.
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