The business already holds sufficient of each of the materials required to complete the contract. Information on the cost of the inventories is as follows:

Steel core Plastic

£/metre £/kg Historic cost 1.50 0.60 Current buying-in cost 2.10 0.70 Scrap value 1.40 0.10 The steel core is in constant use by the business for a variety of work that it regularly undertakes. The plastic is a surplus from a previous contract where a mistake was made and an excess quantity ordered. If the current contract does not go ahead, this plastic will be scrapped

(zero proceeds).

Unskilled labour, which is paid at the rate of £7.50 an hour, will need to be taken on specifically to undertake the contract. The business is fairly quiet at the moment which means that a pool of skilled labour exists that will still be employed at full pay of £12 an hour to do nothing if the contract does not proceed. The pool of skilled labour is sufficient to complete the contract.

Required:

Indicate the minimum price at which the contract could be undertaken such that the business would be neither better nor worse off as a result of doing it.