please help with my advance cost and Management accounting assignment

QUESTION 3 36 marks PARTA Hanover Construction Limited (HCL) is considering whether to accept a one-off contract. The customer is offering a price of $11,600,000. It has been established that total cost will include, direct material, direct labour, direct expenses and suitable overheads. HCL's policy is to apply a mark-up of 40% to all contracts. The following information is relevant to the special contract: 1. The contract requires 12,000 kilogram of a material: a special imported cement. Currently the company has 2,000 kilograms in stock from a previous contract. The cement cost $60 per kilogram when it was bought six months ago. The current special cement can be used in the contract but because of the length of time in storage it would need a new additive at an additional cost of $10 per gallon. The stock of special cement as is, can be sold on the market for $45 per gallon, however, management decided to use the cement in the contract. The current purchase price per kilogram of the special cement is $120. Additionally, the contract also requires 90 gallons of paint. The current price per gallon is $2,800, but 30 gallons are currently in the storeroom. The paints were bought last year at $1700 per kilogram. Management was offered $1400 per kilogram for each of the 30 gallons, but a decision was made to utilise it in this contract. In order to be sold, each gallon of paint in storage would require a new label at cost of $5 per gallon. Management decided to use the 30 gallons of paint in storage on the contract 2. Skilled workers are required. It was advised that 4,000 hours are required at $450 per hour. These workers will be employed specifically for this contract. Unskilled workers are currently paid a rate of $350 per hour. The entity employed 40 unskilled workers to work 7 hours per day for four days per week. The contract is expected to last eight weeks. However, they are currently employed by the company where they are earning a contribution for the company at $25 per hour. 3. The entity has fixed cost of $8,750,000 that is to be charged to the contract. Further analysis indicated that 50% of the fixed cost will continue whether or not the contract is accepted. 4. Finally, the contract requires 900 square feet of space. The space is currently producing 6,000 units of a product that can be sold for $700 each, total cost per unit is $500 (fixed cost per unit is 30% of total cost per unit. Management decided to use the space for the contract. Required: With the aid of computations and based on financial considerations only, advise the management of HCL whether the contract should be accepted (20 marks) QUESTION 3(continued) PART B Clarendon Producers Limited uses an activity base costing system to assess the profitability of its customers. The budgeted overhead for the period is analysed below: Sales order cost $48,000,000 Delivery cost $24,000,000 Special return cost $18,000,000 Below are the cost drivers and the budgeted cost driver levels for the budgeted cost highlighted above: Number of sales order 200,000 Number of deliveries 30,000 Number of special returns 20,000 For the period three customers were analysed and the actual information was produced by the marketing manager: Number of sales order Number of deliveries Number of special returns Contribution margin Angela Wong 570 150 143 $240,000 Garth Moore Mary Johnson 390 980 275 165 45 20 $395,000 $460,000 Required: a. Prepare a customer profitability report using an ABC approach and rank the customers based on the profitability report (10 marks) b. Comment on the findings of the profitability analysis. What should the company do as a result of these findings? (6 marks)