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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: S non
Question 2 A company has been asked to carry out a special order. Completion of the order would require 1. Raw materials: S non Cons 180 kg of material M6" from inventory, bought at $16-40 per kg 400 kg of material M2 to be purchased at $14-30 per kg 2,952 5,720 8.672 Material M6 is used on a regular basis by the company. The current replacement price is 516-90 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 10 pts Activate Window
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