Zero Limited manufactures radiators and it has been offered 1,000,000 by a multinational retailer to supply...

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Zero Limited manufactures radiators and it has been offered €1,000,000 by a multinational retailer to supply 10,000 units in six months' time. Zero Limited has estimated the following resources will be required to fulfil the proposed order: Type 1 Labour -20 staff members working for eight weeks will be required to complete the order. Currently, 8 staff members are idle and will continue to be for the next three weeks. All 20 staff are currently paid €40 per hour for a 40-hour working week. Type 2 Labour - 6,000 hours will be required to complete the order. Currently Type 2 labour is in short supply. It is currently scheduled to be used producing radiators. Each radiator sells for €300 and takes four hours to produce. The variable cost (excluding labour costs) of producing one radiator is €80. Type 2 labour is paid €20 per hour. Four casual employees will be employed for six weeks to package the order. Casual employees will work 35 hours per week and will be paid €10 per hour. 4,000 metres of steel is already in stock and initially cost €10 per metre. If not used for this order it could be resold to a metal merchant at €20 per metre. Each metre of steel will have to be galvanised using a heating process. The total galvanising process will take 400 hours. The galvanised material will cost €5 per minute to heat. The galvanising liquid will cost €100 per metre of steel. Depreciation of the galvanising unit will total €2,000 per week of use. Fixed overheads charged to the order will total €100,000. This comprises €60,000 apportioned head office fixed costs. The remainder represents the cost of leasing the packaging machine that is specifically required for the proposed order. You are required to: (a) Calculate the profit/loss on the proposed contract if relevant costing principles are employed. Zero Limited manufactures radiators and it has been offered €1,000,000 by a multinational retailer to supply 10,000 units in six months' time. Zero Limited has estimated the following resources will be required to fulfil the proposed order: Type 1 Labour -20 staff members working for eight weeks will be required to complete the order. Currently, 8 staff members are idle and will continue to be for the next three weeks. All 20 staff are currently paid €40 per hour for a 40-hour working week. Type 2 Labour - 6,000 hours will be required to complete the order. Currently Type 2 labour is in short supply. It is currently scheduled to be used producing radiators. Each radiator sells for €300 and takes four hours to produce. The variable cost (excluding labour costs) of producing one radiator is €80. Type 2 labour is paid €20 per hour. Four casual employees will be employed for six weeks to package the order. Casual employees will work 35 hours per week and will be paid €10 per hour. 4,000 metres of steel is already in stock and initially cost €10 per metre. If not used for this order it could be resold to a metal merchant at €20 per metre. Each metre of steel will have to be galvanised using a heating process. The total galvanising process will take 400 hours. The galvanised material will cost €5 per minute to heat. The galvanising liquid will cost €100 per metre of steel. Depreciation of the galvanising unit will total €2,000 per week of use. Fixed overheads charged to the order will total €100,000. This comprises €60,000 apportioned head office fixed costs. The remainder represents the cost of leasing the packaging machine that is specifically required for the proposed order. You are required to: (a) Calculate the profit/loss on the proposed contract if relevant costing principles are employed.

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