solve all a. Alliance Sdn. Bhd. has offered to purchase 5,000 units of Champ if Excell Bhd. willing to accept a 16% discount off the regular selling price. There would

solve all a. Alliance Sdn. Bhd. has offered to purchase 5,000 units of Champ if Excell Bhd. willing to accept a 16% discount off the regular selling price. There would be no sales commissions on this order; thus, variable expenses would be reduced by 75%. However, Excell Bhd. would have to purchase a special machine to engrave Alliance Sdn Bhd‘s name on the 5,000 units. This machine would cost RM10,000. Excell Bhd. has no assurance that Alliance Sdn. Bhd will purchase additional units in the future. Evaluate the impact on profit if this special order is accepted. Transcribed Image Text: Excell Bhd produces and sells a single product named Champ. The company operates at its
normal capacity of 30,000 units per year. Costs associated with this level of production and
sales are as follows:
Unit
Total
(30,000 units)
RM
RM
Direct materials
15
450,000
Direct labour
8
240,000
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling expenses
Fixed selling expenses
3
90,000
9
270,000
4
120,000
6
180,000
1,350,000
Total cost
45
The product is sold for RM50 each. Fixed manufacturing overhead is constant at RM270,000
per year within the range of 25,000 units to 30,000 Champs per year.
Required:
Due to Covid-19 pandemic, Excell Bhd expects to sell only 25,000 units of Champ through
regular channels in year 2021. Assuming the following special orders have been received by
the company in year 2021.

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