Topic:Performance management

Topic 2.1 - Shert-term Decision Making Technique Tutorial Questions Question 1 Cally Ltd has been approached by a customer who would like an urgent job to be done for them, and they are willing to pay $55,000 for the job. The special job-order will require the following materials: Total units Units B V of Realizable Replacement Material Required in stock stock units Value Cost $z'unit $funit $funit W 3,000 0 - - 5.00 X 1,000 400 6.00 5.00 8.00 Y 2,000 1,300 5.00 7.00 9.00 Z 500 500 11.00 12.00 13.00 Material X is used regularly by the company, and if units of X are required for this job, they would need to be replaced to meet other production demand. Material Y and Z are in stock as the result of previous over-buying, and they have a limited usage in production. No other alternative use could be found for material Y. However, units of material Z could be used in another job as substitute for 700 units of material Z1, which currently costs $10 per unit (of which the company has no units in stock at the moment). Required: Calculate the relevant costs of all materials in deciding whether or not to accept the special job order. Discuss your rationale (justications) to include or to exclude any costs (Relevant and Irrelevant costs)