Beesom & Co has just tendered for a service contract that will last 6 months using 3 employees on a full-time basis; they each earn $18,000 a year but two of them are just about to be made redundant. The redundancy pay is estimated at $11,000 each. The estimated net profit of this contract is $130,000 after charging all expenses including $25,000 depreciation on the fixed assets involved. (These assets will be kept by the company for use elsewhere if the contract is not obtained.) What is the relevant cash benefit of the contract to the company?

Practice Question 9 options:

a)$191,000

b)$177,000

c)$152,000

d)$155,000