A cycle tyre manufacturing company has been approached by a

Selling Price Tk. 48.00

Variable Cost

Production Tk. 24.00

Selling Tk. 06.00 Tk. 30.00

Contribution Tk. 18.00

The variable selling costs on the special order would be Tk. 1.00 per unit.

(i) Determine whether the offer should be accepted by the firm or not.

(ii) Determine the lowest price that the company could charge on the special order and not reduce it income.

(iii) Suppose now that the shopkeeper offers to buy 8,000 tyres per month at Tk. 32.00 per tyre. The offer would be for an entire year. Expected sales are 60,000 tyres per month without accepting the special order. Assuming further that there is no beginning inventory and that sales lost during the year would not be made up in the following year, determine whether the offer should be accepted, and determine the lowest price that the company could accept.