(c) Incorporate the effects of the information shown in the Appendix (below) into your estimates of direct material costs, explaining any changes you consider it necessary to make to the above direct material cost of £4,000.

Appendix to Exercise 10.4 Based on historic costs, direct material costs were computed as follows:

£

Paper grade 1 1,200 Paper grade 2 2,000 Card (zenith grade) 500 Inks and other miscellaneous items 300 4,000