Question 7 (a) Explain relevant cost. (b) How can you determine the relevant cost for machinery? (c) AA Craft Enterprise was set up as partnership of three local artists to provide means of selling their hand-craft products in and around the Cape Coast Castle. One of the partners, a ceramic artist, has developed a business plan, which involves creating a workshop at the rear of the stores. The artist will run the workshop and provide sessions to groups in the art of ceramic work and painting. It is anticipated that the artist will have only 35 labour hours a week available for the sessions. The following information has been estimated for each of the three groups: Adult School Children GH GH GH Sales (price per group) 120 150 144 Materials 48 60 72 Labour 24 32 16 Total variable cost per group 72 92 88 Labour hours per group (artists time) 1.5 hours 2 hours 1 hour Estimated number of group bookings per week 8 10 7 The total fixed cost for the workshop per week are estimated at GH667. The artist is concerned that he needs to be present for the full duration of each workshop, he cannot provide for the estimated number of bookings per week. Required: (a) Determine the production plan that would maximize profit during the period. (b) Prepare the profit plan for the business.