-.19 (Accepting an offer-Relevant Cost Concept) A company has been making a machine to order for a customer, but the customer has gone into liquidation, and there is no prospect that any money will be obtained from the winding up of the company. Costs incurred to date in manufacturing the machine are Rs. 50,000 and progress payments of Rs. 15,000 have been received from the customer prior to the liquidation. The sales department has found another company willing to buy the machine for Rs. 34,000 once it has been completed. To complete the work, the following costs would be incurred: (a) Materials - these have been bought at a cost of Rs. 6,000. They have other use, and if the machine is not finished, they would be sold as scrap for Rs. 2,000. (b) Further labour costs would be Rs. 8,000. Labour is in short supply, and if the machine is not finished, the work force would be switched to another job, which would earn Rs. 30,000 in revenue, and incur direct costs (not including direct labour of Rs. 12,000 and absorbed (fixed) overhead of Rs. 8,000. (c) Consultancy fees Rs. 8,000 would be added to the cost of the additional work. (d) General overheads of Rs. 8,000 would be added to the cost of the additional work. Should the new customer's offer be accepted? Prepare a statement showing the economics of the proposition