1. Calculate the Full Cost of the order and state any assumptions that you have made in deriving this figure?

John Jeffries recently left the amy after more than 20 years in the service. He had decided that at 45 years of age it was time to start a second career. Throughout most of his life John had a passion for sailing and had competed successfully in many offshore yacht races. He felt that because of his expertise and interest in sailing and the fact that over the years he had cultivated many friends and contacts in the sailing world, he would be wise to invest his money and energies in this area of business. After many months of searching for a suitable business, last October John and his wife agreed to purchase all of the shares of Windcatcher Ltd for 500,000 as at the 31 December. The business was involved in the manufacture of sails on an individual 'made to measure' Most of the customers were private individuals, though about 10% of orders each year were placed by small boat-builders. Windcatcher also undertook some repair work to damaged sails. The business was established in 1970 by Arthur Davies and was managed by him until his sudden death in August. Over that period he had shown a strong interest in the technical side of the business and Windcatcher enjoyed a good reputation for the quality of the products. However, he had had little interest in financial matters and maintained only rudimentary management accounting records basis for boats ranging in size from one-man dinghies to ocean-going yachts. Demand for Windcatcher's work had been very buoyant over recent years, the output being restricted only by the shortage of space at the business's premises and by the lack of appropriately skilled labour. John Jeffries could see no reason for the level of demand to fall in the future, but he could see no immediate prospects for expanding the workforce or finding larger premises. In the three-year period preceding Arthur Davies's death the results of the business were as follows First year Year before last Last year E000 E000 000 000 000 000 Sales revenue Materials consumed Production expenses Admin expenses Sales and distribution expenses 1,002 1,032 (526) (354) (554) (350) (24) (56) (370) (24) (52) 954 (984 1004 Net profit before directors salaries and Corporation tax 26 18 28