do only 2nd part please

nchine which originally cost 312,000 has an estimated life of 10 years and it depreciated at the rate 200 per year. It has been unused for some time, however, as expected production orders did not rialise. cial order has now been received which would require the use of the machine for two months. The current net realisable value of the machine is $8,000. If it is used for the job, its value is expected to fall to 37.500. The net book value of the machine is 78,400. Routine maintenance of the machine currently costs 340 per month. With use, the cost of maintenance and repairs would increase to 360 per month. What would be the relevant cost of using the machine for the order so that it can be charged as the minimum price for the ordere b) X Ltd. has been approached by a customer who would like a special job to be done for him and is willing to pay 22,000 for it. The job would require the following materials: Materials Total units required Units already in stock Book Value of units in stock /unit Realisable Value /unit Replacement Cost /unit 6 A 0 600 1,000 1,000 1,000 2 000 2.5 B 5 700 3 2.5 4. D 200 200 4 6 9 Material B is used regularly by X Ltd. and if stocks were required for this job, they would need to be replaced to meet other production demand. f) Materials C and D are in stock as the result of previous excess purchase and they have a restricted use. No other use could be found for material C but material D could used in another job as substitute for 300 units of material which currently cost *5 per unit (of which the company has no units in stock at the moment.) What are the relevant costs of material, in deciding whether or not to accept the contract? Assume all other expenses on this contract to be specially incurred besides the B 600 2 2.5 5 7.000 1.000 200 3 700 200 2.5 4 D 4 6 9 Material B is used regularly by X Ltd, and if stocks were required for this job, they would need to be replaced to meet other production demand. Materials C and D are in stock as the result of previous excess purchase and they have a restricted use. No other use could be found for material C but material D could used in another job as substitute for 300 units of material which currently cost 75 per unit (of which the company has no units in stock at the moment.) What are the relevant costs of material, in deciding whether or not to accept the contract? Assume all other expenses on this contract to be specially incurred besides the relevant cost of material is 3550. Solution: (a) Computation of relevant cost of using the machine for the order Fall in sale value, if used Incremental maintenance cost (8000-7500) [(60-40)x2] 500.00 40.00 540.00