#BD QUESTION 2 PQ Services Ltd has been asked to quote a price for a special contract to provide a service that will take one week to complete. Information relating to labour for the contract is as follows: Grade of laboure Hours required Basic rate per hour Skillede 152 18 Semi-skillede 36- 142 Unskilled 52e 112 - T. T. 1. 1. A shortage of skilled labour means that the necessary staff to undertake the contract would have to be moved from making a product which would sell for 120 each and have costs, including labour and also material cost, of 100 each. Semi-skilled labour is currently being paid at semi-skilled rates to undertake unskilled work. If the relevant members of staff are moved to work on the contract, unskilled labour will have to be employed for the week to replace them.- The unskilled labour actually needed to work on the contract will be specifically hired for the week of the contract The manager who will oversee this contract earns 1,200 a week. e All labour is charged to contracts at 50 per cent above the rate paid to the employees, so as to cover the contract's fair share of the business's general costs (rent, heating and so on). It is estimated that the general costs will increase by 200 as a result of undertaking the contract. Undertaking the contract will require the use of a specialised machine for the week. This machine is currently being hired out to another business at a weekly rental of 525 on a week-by-week contract. The machine is depreciated at an expense of 200 a week in the accounts of PQ Services Ltd. To derive the above estimates, the business has had to spend 400 on a specialised study. If the contract does not proceed, the results of the study can be sold for 150.- An estimate of the contract's fair share of the business's rent is 150 a week. Required: Calculate the minimum price at which PQ Services Ltd could undertake the contract so that it will be neither better nor worse off as a result of undertaking it. Total = 25 marks