Question 2: (10 marks) (a)Ahmed constructs buildings in Abu Dhabi. Ahmed was approached recently by a customer regarding a potential project, and he submitted a bid of $967,600, derived as follows: (5 Marks) Land Raw materials Labor costs $160,000 200,000 240,000 $600,000 150,000 Construction overhead_-25% of direct costs Allocated corporate overhead Total cost 70,000 $820,000 Ahmed adds an 18% profit margin to all jobs, computed on the basis of total cost. In this client's case the profit margin amounted to $147,600 ($820,000 x 18%), producing a bid price of $967,600. Assume that 70% of construction overhead is fixed. Required: 1. Suppose that business is presently very slow, and the client countered with an offer on this home of $780,000. Should Ahmed accept the client's offer? Why? (4 marks) ii. If Ahmed has more business than he can handle, how much should he be willing to accept for the home? Why? (1 mark) (b) Abu Dhabi Company has experienced a number of out-of-stock situations with respect to its finished-goods inventories. Inventory at the end of May, for example, was only 10 units an all-time low. Management desires to implement a policy whereby finished-goods inventory is 60% of the following month's sales. Budgeted sales for June, July, and August are expected to be 1,700 units, 1,900 units, and 2,150 units, respectively. Required: Determine the number of units that Abu Dhabi Company must produce in June and July (5 marks: 3 marks no. of units produced in June, 1 mark total finished units needed, 1 mark no. of units to be produced in July)