Question

Flowers & Vegs Organic Company (FVOC) located in Arusha region produces silk roses. Sproutto Profit Ventures (SPV)located in Kenya has approached FVOC with a proposal to buy 2,000 silk roses for TZS 4,000/= each. For FVOC its regular customers are charged with TZS 4, 250/= for each rose. Further details indicates that FVOC has the necessary capacity while costs associated with silk roses productions per annum are also provided at the normal production and sales of 10,000 roses:    TZS Direct material 21,000,000 Direct labour 13,000,000 Manufacturing overhead 9,000,000 Total 43,000,000 - Further information reveals that 40% of the manufacturing overhead is variable and all fixed overhead are usually allocated equally to all products produced. Required - In good format, prepare an incremental analysis to analyse whether FVOC should accept the order from SPV’s Kenya.

Answer 1