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Could you please help me with this question on relevant costing? George Jackson operates a small machine shop. He manufactures One standard product for direct

Could you please help me with this question on relevant costing?

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George Jackson operates a small machine shop. He manufactures One standard product for direct sale to the market. He also manufactures products. to customer order. His accountant prepared the monthly income. statement shown below: Custom Standard Total Sales Sales Sales Rs. 50,000 Rs. 25,000 Rs. 75,000 Costs: Material 10,000 8,000 18,000 Labour 20,000 7 9,000 Mat-mug, 29,000 Depreciation 6,300 3,600 9,900 Power 700 400 1,100 Rent 6,000 1,000 7,000 Heat and light 600 lOO 700 Lubricants for machines 400 900 1,300 Total costs 44,000 23,000 67,000 Net income Rs. 6,000 Rs. 2,000 Rs, 8,000 The depreciation charges are for machines used in the respective product lines. The power, and lubricants charges represent the actual consumption of these resources by the machines used in the respective product lines. The rent is for the buildingspace which has been leased for 10 years at Rs. 7,000 per month. The rent, and heat and light are apportioned to the product lines based on amount of floor space occupied. All other costs are current costs identied with the product line causing them. \""'x A valued custom sales customer has asked Mrk'lpckson, if he would manufactu e 5,000 ,r special units for him. Mr. Jackson is working at/vpapacity, and would have to give u 0 other business in order to take this business. Hecannot'renege ctrr- tom orders already agreed to, but he could reduce the output of h' standard product by 50% or one month for producing 5,000 units of specially requestedjustom pastliheeustom/er is willing to pay Rs. 7-for each unit. The material cost will be about Rs. 2.00 per unit, and the labour will be Rs. 3.60 per unit. No specialized labour is needed for these units. The additional labour, if required, can be arranged without any problem. Mr. Jackson will have to spend Rs. 2,000 for a special device which will be discarded when thejob is completed. a) Calculate andpfesent the'follovging costs related to the 5,000 unit Custom order: i) ThencremWeorge Jackson due to this order ii) The inqem'e- - enue to George Jackson due to this order iii) The full cost of the order iv) The opportunity cost of accepting the order 0) Should George Jackson accept the order? Explain your answer with appmpriate numbers. (15)

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