Liwewe is a manufacturing company located in the Bibiani producing and supplying furniture to second cycle institutions in Ghana. The company regularly uses material redwood for its products. For a while, the company is unable to obtain adequate raw redwood. It currently has 200kg in inventory for which it purchased at GH¢300/kg two years ago. Since then, the market price keeps rising by 15% per annum. However, if the company decides to re-sell redwood already in stock it can do so at GH¢220/ kg. A customer has placed an order for the production of a product ABOBO that uses 600kg of the redwood. The manufacturing of the product requires 40 hours of labour. The Company currently produces the product MONA that can be sold at GH¢80. The standard cost details of MONA are shown below:

Direct Materials 10kg at GH¢2/kg
Direct Labour 5hrs at GH¢7/hr

Required:
i) Assuming there is no alternative use for 120kg but it could be sold on the market, what will be the relevant material cost of the customer’s product?
ii) 40% of the material in inventory has defects with negligible value and use except for the ABOBO. Estimate the relevant material cost of the ABOBO
iii) What is the relevant cost of labour if the labour must be hired from outside the organisation?
iv) What is the relevant cost of labour if the company expects to have 10 hours spare capacity?
v) What is the relevant cost of labour if labour is in short supply?
vi) What is the relevant cost producing the ABOBO in the light of short supply of scarce