Quection $2$:

Inscape Frinters $($FTy$)$ LG are engsged in the printing of books, posters and all related

printable:

WIt the nasonal elections approaching fast, a tender has been preaerbed to inscape

Printers $($Fty$)$ Ltd for the printing of poaters encouraging indviduals to vote in the electiona.

You

The work would be carred out in addtion to the normal work of the company. Because of

exating commiments, some weekend work would be required to complete the printing of the

posters.

You are the management accourtant of Inacape Frinters $($Fty$)$ Lod and you have requeated

for the trainee accountart to produce the following coat eatimate based upon the reaources

as apecifed by the production manager:

You are aware that conalderable puillcty could be obtained for the company $8$ you are able

to win thls order and the price quobed must be very compettive.

The folowing informatoon relases to the coat eatimate above:

The cardboard to be used ls currently in stock at a value of R$3750.$ It is a specifc colour

which has not been used for some time. The replacement price of the cardboard la R$5000.$

while ita $2$crap value $i.25\%$ of it replacement coet. The production mansger does not

foresee any atemative use for the cardboard II It la not used for the proapective tender.

The inks required are not heid in stock. They would have to be purchased in bulk at a

coat of R$\mathrm{.}1500.90\%$ of the ink purchased would be used in printing the poaters. No oeher

use is foreseen for the remainder.

Exilled labour is underemployed and is only paid for hours worked. However.

If thla printing job la accepted, not only will they become fully employed but

$50\%$ of the time required would be worked at weekends, for which a Premlum of $25\%$ above

the normal hourty rate $la$ pald. The norm al hourty rate I R $20\mathrm{.}00$ per hour.

Unakilled isbour is presently under$-$ullized and $200$ hours per week is recorded as ide

time for which the labourera are nowever pald. If the printing work is camied out on the

weekend, $25$ unsklled hours will be worked during thls tme. The employees concerned

would be glven two hours' time off in lleu of each hour worked on the weekend. The time of

will reduce lde time currently being experienced.

Variable overheads represent the cost of operating the printer.

When not being ueed by the compary, the printer is hired to outalde companies for

R $30\mathrm{.}00$ per hour. This eams a contrbution of R$15\mathrm{.}00$ per hour. There is unilmitsd demand

for this faci ty$.$

Printer depreciation represents the eatimated loas in market value per hour of uasge.

Fired production costs are absorted into production using predetermined houry ratea.

The eatimating coats are an alocation of the departments evisting coats based on time

spent in dacusalons with the communil$/$s organking committee for the printing of the

posters. The company'a poilcy is to apply a $20\%$ mark$-$up on total production coats to recover

adminlstradon coats and then to have a proft equal to $20\%$ of the selling price. However, as

the company would Ike to secure the order, the mark$-$up to recover the adminlatration coats

will remain, but the pront mark" up will be $10\%$ of the sellng price.

REQURED:

Calculate the minimum selling price that the company should quobe for the order. Glve

reasona for your incluelon or exclusion of all costs glvelf in the queation.

Dlacuas five qualtatve factors which ahould be conaldered when making the decialon.

Explain what a limiling or key factor is and give three examples of Imting factors in a

bueiness environment.