Roux ski is a company that specializes in the manufacture of ski pants. The senior management accountant has been asked to advise the board of directors on a production and sales plan for their ski-pants factory. The company manufactures and markets the product which they sell at Rs 200 per unit. Current production is 40,000 units per month which represents 80% of capacity. They have the opportunity to utilize their surplus capacity by selling their product at Rs 130 per unit to an outside buyer.
Total costs for the last month were Rs 5,600,000 of which Rs 1,600,000 were fixed costs. This represented a total cost of Rs 140 per unit.
Required:
Based on the given information, should Roux ski accept the order?