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can you please help me with the answer for this question? 12-34 Relevant costs in investment decision making. Julie Bolts Ltd manufactures mechanical bolts for
can you please help me with the answer for this question?
12-34 Relevant costs in investment decision making. Julie Bolts Ltd manufactures mechanical bolts for different vehicle engines. The company has been approached to submit a quote for supply of some 3-D Bolts. The company's inventory and production records show the following: Materials: The contract requires 3,500kg of iron-cast rods material, which is a material used regularly by the company in other production. The company has 2,000kg of iron-cast rods material currently in stock which had been purchased last month for a total cost of 20,500. Since then, the price per kilogram for iron-cast rods material has increased by 10%. The contract also requires 500kg of copper-cast material. There are 250kg of copper-cast material in stock which are not required for normal production. The material originally cost a total of 3,125. If not used on this contract, the stock of copper-cast material would be sold for f20 per kg. Labor: The contract requires 800 hours of factory labor which is paid 10.00 per hour. There is a shortage of workforce and all the available factory labor is fully employed in the company in the manufacture of 3-D Bolts. The following information relates to 3-D Bolts: 1. Prepare calculations showing the total relevant costs for deciding about the contract in respect of the following cost elements: a. Iron-cast rods material and copper-cast material b. Factory labor 2. Explain how you would decide which overhead costs would be relevant in the financial appraisal of the contractStep by Step Solution
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