Formulas Data Review View Automate Tell me Insert Draw Page Layout Home Wrap Text v Cust Calibri (Body) A A Merge & Centre v BIUV v A = = Paste x Update Available We've made some fixes and improvements. To complete the process, the app needs to restart. X V S LL WU CO A Assessment_2022 Walsmart Ltd is a medium-sized fabrication company, has been approached by an existing customer to submit a tender for a special contract. Due to the cancellation of an existing order, the company has some spare capacity. The costing/estimating section have prepared the following cost estimate using conventional cost accounting methods: Cost estimate Note Direct materials: Steel type X 12,500 Steel type 2 H NM 21,000 Components 10,800 Direct labour: Skilled 2,800 hours at f12 per hour 33,600 Unskilled 1,900 hours at f8 per hour 15,200 Fabrication department: Depreciation of machinery 1,800 Electrical engineering work 20,000 Managerial staff 7,800 Drawing department 1,200 123,900 Non-production overhead at: 4% on cost 10 4,956 128,856 Question Notes Solution Reasons Ready + Accessibility: Investigate escPaste I 51 A x Update Available We've made some fixes and improvements. To complete the process, the app W45 I LU Notes: Assessment_2022 1 There is a sufficient amount of this steel type in stock and it is extremely unlikely that this steel will be needed for any other job in the future due to specification changes. This steel had an original cost but had been reduced for stock valuation purposes. It could also be re-sold to a specialist steel stockholding company: Original cost 18,800 Stock valuation 12,500 Re-sale value 5,800 2 This steel type is in constant use by the company on a variety of projects. This steel: Original cost 21,000 Current replacement price 28,000 3 Components would be required to be bought in for this order at an estimated cost of: E 10,800 4 There is currently a surplus capacity of skilled staff hours. If there is insufficient work skilled staff are redeployed on maintenance work or undertake additional training. Skilled staff continue to be paid even if there is insufficient work. Skilled staff - Surplus hours: 2,600 hours 5 There is currently a surplus capacity of unskilled staff hours. Unskilled staff are not normally paid if there is insufficient work. Unskilled staff - Surplus hours 2,400 hours Co The order is expected to take a number of weeks to complete and the machinery in the fabrication department is being depreciated on a weekly basis. The facilities in this department are currently under- utilised and if not needed on this order they could be hired out at a weekly rate to other businesses. E Depreciation rate per week 300 Contracted out charge per week 450 Expected duration of contract - number of weeks 7 This is expected cost of the electrical engineering work which will be sub-contracted to another company 8 Managerial staff costs comprise the costs of supervision for this order. It will not be necessary to engage additional supervisors. The drawing/plumbing section have already incurred costs in relation to the preparation of the estimate There is also a commitment to pay a fee to a design studio. No further costs are envisaged. Drawing/plumbing 800 Design studio 720 10 Non-production overhead is a fixed cost and the normal method of allocating this to contracts is to add a percentage to the cost of contracts. Non-production overhead rate per contract: 4% 5883868 11 A price ceiling has been placed on this order by the customer. 115,000 Required: 59 Prepare a relevant cost and revenue statement and a report for mangement. The report requires you to supply reasons 8 for your treatment of the various items in the statement, your reason for choosing a relevant cost approach and your recommendation regarding the tender price. Question Notes Solution Reasons + Ready Accessibility: Investigate