Hinds Ltd, as part of its product range, produces the ‘SILVTO’. This product normally sells for £160. The following costs are associated with its production:
|
Cost per unit |
|
|
£ |
|
|
Direct materials |
34 |
|
Direct labour |
75 |
|
Variable overheads |
12 |
|
Fixed costs |
25 |
The directors have recently received a request from a Latvian company offering to purchase 2,000 SILVTOs at a price of £140 each. Advise them as to whether they should accept or reject the Latvian offer.