A factory is divided into three departments, D1, D2 and D3, in each of which the capacity available during the 3 months (January 1 to March 31) is 2,000 hours. The fixed and variable overhead expenses...

A factory is divided into three departments, D1, D2 and D3, in each of which the capacity available during the 3 months (January 1 to March 31) is 2,000 hours. The fixed and variable overhead expenses budgeted for each department for this period are as follows:

On January 1, 2 orders (O1 and O2 ) were received for each of which a selling price of `6,00,000 can be charged and on each of which prime costs are expected to be `2,50,000. The use which the two orders would make of factory capacity differs and is expected to be as follows:

You are required to state which of the two orders (if any) should be accepted, and to show the calculations on which your opinion is based.