Question

    Omega Ltd. has idle capacity and receives a special

    export order for 2,000 units at ₹420 per unit. Normal price = ₹500. Unit variable cost = ₹350. Fixed costs are already covered by regular business. The export order requires special packing costing ₹10 per unit, with no impact on regular business. Should the company accept the order?
    A Reject, as the offer price is below normal price Correct Answer Incorrect Answer
    B Accept, since it gives positive contribution Correct Answer Incorrect Answer
    C Reject, as it does not cover full cost Correct Answer Incorrect Answer
    D Accept only if export duty is exempted Correct Answer Incorrect Answer

    Solution

    • Special cost = ₹350 (VC) + ₹10 (packing) = ₹360 • Price = ₹420 → contribution = ₹60 per unit × 2,000 = ₹1.2 lakh • Fixed costs are unaffected → positive contribution without affecting regular business → Accept

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