MAF551: An international company XIKO Sdn Bhd from Japan approached PrestigeLeather Sdn Bhd to buy 5,000 units of handbag at a price lower: Management Accounting And Control, Case Study, UiTM, Malaysia

Question 3

An international company XIKO Sdn Bhd from Japan approached PrestigeLeather Sdn Bhd to buy 5,000 units of handbag at a price lower than normal selling price. Both companies agreed to the following conditions: –

i. The brand of PrestigeLeather Sdn Bhd will be replaced by the label of XIKO but the cost will be boned by PrestigeLeather Sdn Bhd.

ii. The handbag will be sold for oversea market only especially for Japan and South Korea market.

Required:

a. Explain any FIVE (5) possible internal or external reactions that the company
should consider before making any decision on the acceptance of a special order.

b. Identify THREE (3) qualitative factors that should be considered when deciding to accept the special order.

c. Briefly describe the following terms: –
i. Sunk cost.
ii. Opportunity cost.

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