5) In order to manufacture the special purpose boxes, a machine that has not been used for two years will be required. The company will have to carry out maintenance work on the machine before it can be used. The maintenance work will cost $9 000 6) It is estimated that the actual variable overheads for this tender will amount to $9.60 per box. 7) Fixed overheads are allocated to the tender based on standard machine hours. The estimated increase in fixed overheads should the tender be undertaken is $8 000. 8) The sales department estimates that it will cost $3 000 to complete the paperwork for the tender submission.Required: a) Using relevant costing, advise on the minimum price that would be appropriate for the tender submission. You should detail all items and clearly explain the rationale behind your calculations. (15 points) b) Outline factors that should be considered before using the minimum price for the tender submission. (7 points) c) Fixed costs and sunk costs are often treated as irrelevant when using relevant costing. However, some argue that this depends on the decision at hand. Discuss this point of view. (15 points)Ohio Itd has been invited to submit a tender for a one-off batch of 5 000 special purposed boxes by a premium freight company, Lily Lid. The boxes need to be strong and durable to prevent damage to transported goods and to reduce transportation cost, it should be light. Lily Ltd has requested that the boxes be produced in an environmentally friendly manner as they are committed to reducing their carbon footprint. The requested containers are similar to some of the products regularly manufactured by Ohio Ltd. The estimated cost of the required batch of boxes using the company's standard costs is as follows: $ Material Edwardo 10 000 kg at $25 per kg: 320 000 Material Lottery 5 000 kg at $45 per kg: 134 000 Direct labour 2.5 hours per container at $9 per hour: 90 000 Variable overheads 12 000 hours at $4 per hour: 36 000 Fixed overheads 12 000 hours at $24 per hour: 360 000 Total standard cost: 940 000 Based on market intelligence, the sales director believes that a close competitor will be submitting a price lower than the standard cost of Ohio Lid. As Ohio Ltd has spare factory capacity, the sales director has requested you to advise on an acceptable minimum price. Your investigations have revealed the following: 1) Preliminary investigation work has been carried out for the preparation of the tender. This had cost $5 000. 2) Ohio Ltd has 5 000 kg of Material Edwardo in stock. These materials are regularly used and can only be purchased from a supplier in Canada. The company has just received notification from the Canada supplier that the price for Material Edwardo has been increased to $30 per kg. Its scrap value is $22 per kg. The company is aware that an equivalent material can be sourced locally but this will cost three times more than the price charged by the Canada supplier. Although the locally sourced material will reduce its carbon footprint, Ohio Led has decided to use Material Edwardo for the tender due to cost considerations.3) Material Lottery is rarely used by Ohio Ltd. The company was planning to dispose of the 2 000 kg of Material Lottery it has in stock at a scrap value of $40 per kg. The current purchase price of Material Lottery is $50 per kg. 4) Ohio Ltd has 8 000 hours of idle labour capacity. This is direct labour capacity that the company can utilise as and when required. The company will not have to pay the direct labour should there be no available work. All other direct labour capacity is tied up with other projects and the company is unable to hire any additional direct labour from the external market. This means that should the tied up direct labour be required on the tender, the company will have to forgo contribution from other projects of $33 per hour. The direct labour is currently paid $12 per hour