Murray Polls Limited recently contracted to conduct an opinion poll concerning global warming and its causes. Its costing for this job is shown below:

(Overheads are absorbed on the basis of questioning hours.) The client paid a deposit of £5,000 and contracted to pay the remainder within one month of receiving the report. Unfortunately, Murray has just been informed that its client has gone into liquidation and is not expected to be able to meet any of its debts. At this point, Murray has completed all the planning and 75% of the questioning; travel and subsistence so far total £3,700 and 50% of the telephoning has been completed. No analysis has yet been done. If the poll is abandoned, two of the ten researchers involved will have to be paid a cancellation fee of £200 each. The managing director of Murray immediately suspends all work on the contract and decides to attend an international conference on the environment, taking place in Stockholm next week. He is hopeful of finding another client for this project as he will be able to offer the completed poll and report at a greatly reduced price. His airfares, hotel bills and out-of-pocket expenses for the five-day Stockholm trip are expected to be £2,200. His rate of pay works out at £400 a day.

Task:
Calculate the lowest price the managing director can quote without making his fi rm worse off and advise him accordingly. State your reasons for including or excluding the above factors in your calculation.

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£. 100 hours @ £12 800 hours @ £7 1,200 Planning Questioning 5,600 4,800 Travel and subsistence Telephone Analysis of results & report Fixed overheads 30,000 minutes @ £0.02/min 60 hours @ £12 800 hours @ £25 600 720 20,000 Total cost Profit @ 20% mark-up Price to client 32,920 6,584 £39,504