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QUESTION 5 Zero Limited manufactures radiators and it has been offered E 1,000,000 by a multinational retailer to supply 10,000 units in six months time.
QUESTION 5 Zero Limited manufactures radiators and it has been offered E 1,000,000 by a multinational retailer to supply 10,000 units in six months\" time. Zero Limited has estimated the following resources will be required to llfil the proposed order: Type 1 Labour 20 staff members working for eight weeks will be required to complete the order. Currently, 8 staff members are idle and will continue to be for the next three weeks. A1120 staff are currently paid 40 per hour for a 40-hour working week. Type 2 Labour 6,000 hours will be required to complete the order. Currently Type 2 labour is in short supply. It is currently scheduled to be used producing radiators. Each radiator sells for E300 and takes four hours to produce. The variable cost (excluding labour costs) of producing one radiator is 30.Type 2 labour is paid 20 per hour. Four casual employees will be employed for six weeks to package the order. Casual employees will work 35 hours per week and will be paid 10 per hour. 4,000 metres of steel is already in stock and initially cost E 10 per metre. If not used tbr this order it could be resold to a metal merchant at 20 per metre. Each metre of steel will have to be galvanised using a heating process. The total galvanising process will take 400 hours. The galvanised material will cost 5 per minute to heat. The galvanising liquid will cost 100 per metre of steel. Depreciation of the galvanising unit will total 2,000 per week of use. Fixed overheads charged to the order will total 100,000. This comprises 60,000 apportioned head office fixed costs. The remainder represents the cost of leasing the packaging machine that is specically required for the proposed order. You are required In: (3} Calculate the protfloss on the proposed contract if relevant costing principles are employed
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