Question 1 (a) 75,000 direct labour hours of manufacturing capacity (standard working hours time) available over the next three months after completion of regular orders for XYZ Sdn Bhd. There are two alternatives for the spare capacity utilization. Direct labour costs are avoidable if the available hours are not used. The first alternative involves the early manufacture of a firm future order that would reduce the current anticipated need for skilled workers in a few months time due to more time available to train the semi-skilled workers. The skilled labour rate is 40% of the basic rate of RM5.40 per hour, and is charged to production as a direct labour cost. Manufacturing overheads are charged at RM6.00 per direct labour hour. 30% of the overhead costs are variable with hours worked. Alternatively, the company is considering a one-off job to be completed within three months that would require the following resources:

1. Raw materials: (i) Aluminium: 980 kg is required. It has a current weighted average cost in stock of RM4.02 per kg and a replacement cost of RM4.10 per kg that will be used continuously in future production. (ii) Copper: 840 kg is required which is in stock at RM5.20 per kg. It has a current replacement cost of RM6 per kg. If used, it will not be replaced. It has no other anticipated use, other than disposal for RM3.20 per kg. (iii) Other materials costing RM6200.

2. Direct labour: (i) Skilled labour is required to work for the 25,000 hours for this job. (ii) Semi-skilled labour is to work for the remaining available hours.

Required: Determine the minimum price that could be imposed for the special order that would increase the company's profit; as compared with the alternative use of spare capacity.