Question: Ezy Fixit Ltd has been asked to quote a prioe for a special job that must be completed within one week. Thejoh requires a total

 Ezy Fixit Ltd has been asked to quote a prioe for

Ezy Fixit Ltd has been asked to quote a prioe for a special job that must be completed within one week. Thejoh requires a total of90 skilled labour hours and 80 unskilled labour hours. The current employees are paid a guaranteed minimum wage of $525 for skilled workers and $280 for unskilled workers for a 35hour week. Currently, skilled labour has spare capacity amounting to ?0 labour hours each week and unskilled labour has spare capacity amounting to 100 labour hours each week. Additional skilled workers and unskilled workers can be employed and paid by the hour at rates based on the wages paid to the current workers. The materials required for the job are currently held in inventory at a book value of $5,000. The materials are regularly used by Ezy Fixit Ltd and the current replacement cost for the materials is 54,500. The total scrap value of the materials is $1,000. Required: a) What is the total relevant cost to Ezy Fixit Ltd of using skilled and unskilled labour on thisjob? [2 marks} b} what is the relevant cost of using the materials in inventory on this job? Justify your answer. [2 marks] c) Explain how shortterm decisions differ from longten\" decisions of a business and provide examples to support your answer. [3 marks] SHOW YOUR WORKING

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!