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b) A division of Bakhressa Autos has received an enquiry from one of its major customers for a special order for a component that will

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b) A division of Bakhressa Autos has received an enquiry from one of its major customers for a special order for a component that will require 1,000 skilled labour hours and that will incur other variable costs of Tshs. 8000. Skilled labour is currently in short supply and if the company accepts the order then it will be necessary to reduce production of component P. Details of the cost per unit and the selling price of component P are as follows, all figures in Tanzania shilling: Selling price Less: direct labour (4hours at Tshs.10 per hour) 40 Other variable costs Contribution to profit 12 52 36 Required: Determine the minimum selling price the company should accept for the special order. (15 Marks)

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