please answer just required (b)?

Questions - Relevant costing Acompany. GP Ltd, undertakes special building is presently consider to bid for a contract to be delivered in one years has no other contra consideration for the foreseeable future. The following information is available resently considering the price at which other contract underway or under To carry out the contract the company we out the contract the company wod o wane supervisor at a cost of LI6,500 and two catenata These costs include the com normal apportionment of fived overheads at the rate of 10of labour cost bad weather during the winterb a nden is intended that at these umes one of the craftsmen will be used for interesintenance and decorating work Me will use materials costing (2.000 GP d. has already obtained two quotations from building firms for this maintenance and decorating work for 600 and the other for 4.000, both inclusive of all labour and materials The equipment that would be used on the contract was bought seven years ago for E45.000 Depreciation has been written off on a straight line basis, assuming an eight year life and a scrap value of 5,000. The firm has recently been offered 5,000 for this equipment and it believes that in one year's time it will be able to obtain 2,000. The equipment will only be used for this contract. The contract will require a number of materials as follows: No. of units Price per unit Material Quantity in stock Quantity needed for contract Purchase price of stock items Current purchase price price 200 17.00 10.00 400 1600 2,200 300 1.200 04.00 125.00 Materials A and B are in regular use for other purposes but it is not expected that will have any future use The building works will use a lorry that was leased one year ago for a period of three years for 4,500 per year. It is not expected that the lorry will be used for any other purpose In addition to the above, the direct expenses of the contractare estimated at 7.000 The owner of the firm has recently been offered a one-year consultancy assignment in another part of the country for which he would receive a fixed fee of 20,000. If he were to accept this assignment, he would need to employ a manager to run his business in his absence ata cost of 14,000 and he would incur expenses of 3,000 the firm accepts this contract, he will be unable to undertake the consultancy assignment Required: a) You are required to calculate the price at which the owner of the firm should be willing to undertake the contract in order to break even, based solely on the above information and justifying your analysis using relevant cost principles (20 marts b) State any assumptions contained in the analysis at above and discuss any other organisational or strategic factors that DG Ltd. should consider Smarts Total 25 Marks) Page 9 of 13 Questions - Relevant costing Acompany. GP Ltd, undertakes special building is presently consider to bid for a contract to be delivered in one years has no other contra consideration for the foreseeable future. The following information is available resently considering the price at which other contract underway or under To carry out the contract the company we out the contract the company wod o wane supervisor at a cost of LI6,500 and two catenata These costs include the com normal apportionment of fived overheads at the rate of 10of labour cost bad weather during the winterb a nden is intended that at these umes one of the craftsmen will be used for interesintenance and decorating work Me will use materials costing (2.000 GP d. has already obtained two quotations from building firms for this maintenance and decorating work for 600 and the other for 4.000, both inclusive of all labour and materials The equipment that would be used on the contract was bought seven years ago for E45.000 Depreciation has been written off on a straight line basis, assuming an eight year life and a scrap value of 5,000. The firm has recently been offered 5,000 for this equipment and it believes that in one year's time it will be able to obtain 2,000. The equipment will only be used for this contract. The contract will require a number of materials as follows: No. of units Price per unit Material Quantity in stock Quantity needed for contract Purchase price of stock items Current purchase price price 200 17.00 10.00 400 1600 2,200 300 1.200 04.00 125.00 Materials A and B are in regular use for other purposes but it is not expected that will have any future use The building works will use a lorry that was leased one year ago for a period of three years for 4,500 per year. It is not expected that the lorry will be used for any other purpose In addition to the above, the direct expenses of the contractare estimated at 7.000 The owner of the firm has recently been offered a one-year consultancy assignment in another part of the country for which he would receive a fixed fee of 20,000. If he were to accept this assignment, he would need to employ a manager to run his business in his absence ata cost of 14,000 and he would incur expenses of 3,000 the firm accepts this contract, he will be unable to undertake the consultancy assignment Required: a) You are required to calculate the price at which the owner of the firm should be willing to undertake the contract in order to break even, based solely on the above information and justifying your analysis using relevant cost principles (20 marts b) State any assumptions contained in the analysis at above and discuss any other organisational or strategic factors that DG Ltd. should consider Smarts Total 25 Marks) Page 9 of 13