A company has installed capacity of 30,000 labour hours the production and sales volume at present have given below: ➢ Production and sales in unit: 100,000 units ➢ Cost of producing one unit:…

A company has installed capacity of 30,000 labour hours the production and sales volume at present have given below: ➢ Production and sales in unit: 100,000 units ➢ Cost of producing one unit: Direct material Rs 4 Direct labor Rs 3 Manufacturing overhead Rs 5 Total cost Rs 12 ➢ Selling price per unit: Rs 15 The company received an offer to supply 20,000 units at a price of Rs 11 per unit and production of four units required one labour hour and fixed manufacturing cost was Rs 240,000. Required: Differential cost analysis to decide whether the company should or should not accept the offer.