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:…

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.