question archive As a result of an expansion program, Majid Enterprises, Inc has excess capacity of 20,000 machine hours, which is expected to be absorbed by the domestic market in a few years
As a result of an expansion program, Majid Enterprises, Inc has excess capacity of 20,000 machine hours, which is expected to be absorbed by the domestic market in a few years
Subject:AccountingPrice: Bought3
As a result of an expansion program, Majid Enterprises, Inc has excess capacity of 20,000 machine hours, which is expected to be absorbed by the domestic market in a few years. The company has received inquiries from two companies located in other country. One offer to buy 210,000 units of product F-W at Rs 0.61 per unit; the second offers to buy 300,000 of product D-FW at Rs 0.65 per unit. Majid Enterprises can accept only one of these two offers. The standard costs for these products are as follows. F- W D-FW Materials......... Rs 0.25 Rs 0.35 Direct labor......... 0.10 0.12 Factory Overhead. 0.20 0.28 Total standard cost... 0.55 0.75 Factory overhead is applied on a machine hour basis at 5.60 per hour; 60% of the factory overhead is estimated to be fixed. No marketing and administrative expenses would be applicable to either order; transportation charges are to be paid by the buyer. Required: The order that should be accepted?
