A contract is under consideration that requires 600 labour hours to complete. There are 350 hours...

  

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A contract is under consideration that requires 600 labour hours to complete. There are 350 hours to spare capacity. The remaining hours for the contract can be found either by weekend overtime working paid at double the normal rate of pay or by diverting labour from the manufacturing the product QZ. If the contract is undertaken and labour is diverted, then sales of product QZ will be lost. Product QZ takes three labour hours per unit to manufacture and makes a contribution of Rs.12 per unit. The normal rate of pay of labour is Rs.9 per hour. Required: What is the total relevant cost of labour for the project? Question 1b A company is evaluating a project that required the following types of material. MATERIAL IN STOCK NEEDED PURCHASE CURRENT PURCHASE FOR CONTRACT A B C D 100 1,100 E F 1,000 1,000 PRICE OF STOCK (RS.) 1.10 2.00 4.00 0.18 0.90 PRICE (RS.) 3.00 0.90 100 100 200 2.00 50,000 5,000 0.25 1,000 3,000 1.00 Material B and E are used regularly in the company. Material A could be sold to a local sculptor, if not used for the contract. Material A and E can be used for other purpose, such as property maintenance. Company has no use for material D and F, the stocks of which are obsolete. Required: Calculate the relevant cost of each material. CURRENT RESALABLE PRICE (RS.) 6.00 3.00 0.20 2.00 2.00 1.00 A contract is under consideration that requires 600 labour hours to complete. There are 350 hours to spare capacity. The remaining hours for the contract can be found either by weekend overtime working paid at double the normal rate of pay or by diverting labour from the manufacturing the product QZ. If the contract is undertaken and labour is diverted, then sales of product QZ will be lost. Product QZ takes three labour hours per unit to manufacture and makes a contribution of Rs.12 per unit. The normal rate of pay of labour is Rs.9 per hour. Required: What is the total relevant cost of labour for the project? Question 1b A company is evaluating a project that required the following types of material. MATERIAL IN STOCK NEEDED PURCHASE CURRENT PURCHASE FOR CONTRACT A B C D 100 1,100 E F 1,000 1,000 PRICE OF STOCK (RS.) 1.10 2.00 4.00 0.18 0.90 PRICE (RS.) 3.00 0.90 100 100 200 2.00 50,000 5,000 0.25 1,000 3,000 1.00 Material B and E are used regularly in the company. Material A could be sold to a local sculptor, if not used for the contract. Material A and E can be used for other purpose, such as property maintenance. Company has no use for material D and F, the stocks of which are obsolete. Required: Calculate the relevant cost of each material. CURRENT RESALABLE PRICE (RS.) 6.00 3.00 0.20 2.00 2.00 1.00

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1A Out of 600 Hours needed 350 Hour spare capacity is there so only 250 hour cost of labor needs to ... View the full answer