Qn six,Seven and Eight

QUESTION SIX- Relevant Costs - From the Book In decision making, it commonly agreed that historical/past costs are irrelevant costs. Does this mean that what happened in the past is irrelevant? Discuss QUESTION SEVEN - Relevant Costs Mr. King owns a used RAV4 new model car which he bought in 1" January 2018 and paid equivalent to TZS 26,000,000, this price is relatively cheaper than the recent car auction. Mr. King believes that the depreciation rate of his car is 5% per annum. On 31" December 2018, Mr. Price offered TZS 30,000,000 for Mr. King's car. Required Assuming running costs are ignored except depreciation and historical cost of the car, what is the cost of keeping the car for Mr. King's own use? QUESTION EIGHT - Relevant Costs KISU Ltd is a garage business located at Tabata in Ilala-Dar es Salaam; the business has an old car that was bought in 2017 for TZ'S 7,000,000. This car require a reconditioned engine to operate, a reconditioned engine is available at TZS 3,000,000. To fit the engine requires seven hours work of a fully employed and well trained mechanic who is paid TZS 12,000 an hour. The basic working hours of fully employed mechanics is eight (8) hours a day. KISU Lid has an option of selling the car without a reconditioned engine at an estimated price of TZS 8,000,000. Required a) Assume there is spare capacity, determine the minimum price at which KISU Ltd should sell the car with a reconditioned engine fitted? b) Assume there is no spare capacity and that if a mechanic is to be put on the engine- replacement job, it will mean that other work that the mechanic could have done during the seven hours, all of which could be charged to a customer, will not be undertaken. The garage's labour charge is TZS 40,000 an hour, though the mechanic is only paid TZS 12,000 an hour. What is the minimum price at which the garage should sell the car, with a reconditioned engine fitted, under these altered circumstances