42. Loaming rate - Sole Ld 2.d tex joovs/is Sole Ltd produces shoes for children and supplies them to various schools. This year they have received a contract proposal from Marigold High School for 18,000 pairs of shoes in 12 equal batches. The management of Sole has decided to accept the proposal, only if it yields a net cash flow of $43,000. The cost accountant of Sole Ltd had prepared estimates of the costs that would be incurred to complete the above onder. Detalls of this estimate, along with the proposed sales price are given below. The project manager of Sole Lud. highlighted a few areas that need to be looked into: (i) As Marigold has placed a large order, they have negotiated the contract price as $30,000 per batch. (i) Sole Lid. will require additional space. Hence, rent will rise to $5,000 per month. (iii) Direct material costs for the production of the first three batches will be the same. The second three batche will cost 95% of the cost per batch of the first three batches. Theroafter, all the batches will cost 95% of the cost of the second throo botches. All the purchases are made in cash; therefore the company can avail c 2% cash discount on the total cost. (iv) The variable cost per pair of shoes is $1.75. (v) For the first seven batches a 90% learning curve will apply to the labour costs. After which the labour tinic utilized for production would be equal to the time of the 77n batch. Note: at the learning rate of 0.9(90%), the leaming factor (b) would be -0.1520 . Required: (a) Prepare a report showing the estimated net cash flows of the project. (b) Should Sole Lid, accept the project? What measures can it take to increase the net cash fow of the props (c) Calculate the time taken by the second batch if the actual rate of i 80% 70% (5 marks) Bnefly explain which learning rate is faster, and quicker