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Question 2 A company has been asked to carry out a special order. Completion of the order would require: 1. Raw materials: $ 180
Question 2 A company has been asked to carry out a special order. Completion of the order would require: 1. Raw materials: $ 180 kg of material M6" from inventory, bought at $16-40 per kg 2.952 400 kg of material M2 to be purchased at $14-30 per kg 5.720 8.672 10 pt *Material M6 is used on a regular basis by the company. The current replacement price is $16-90 per kg. 2.430 direct labour hours. The direct operatives, paid at $11 per hour, would have to be transferred from working on another project which would have generated a contribution of $1,960. 3. Incremental overheads of $2-50 per direct labour hour. General fixed overheads are absorbed at a rate of $14 per direct labour hour. The company must make a decision on whether to accept the special order. Required: . Calculate the relevant cost of the special order for the purpose of making the decision. (10 marks)
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