QUESTION THREE Ntinga Construction Limited has taken two contracts on 1 st March 2020. The position of Cl ADVANCED DIPLOMA IN FINANCIAL MANAGEMENT-ACADEMIC AND ASSESSMENT CALENDAR DISTANCE extra 1500.components required by CDF, RDF would have to forgo other external sales of R50 000 which have a contribution to sales ratio of 40%. Labour hours 850 direct labour hours would be required. All direct labour within CDF is on an hourly basis with no guaranteed wage agreement. The grade of labour required is currently paid R 10 per hour, but department W is already working at 100% capacity: Possible ways of overcoming problem are: (0) Use workers in department Z because it has sufficient capacity. These workers are paid R15 per hour. Arrange for subcontract workers to undertake some of the other work performed at department W. The subcontract workers would cost R13 per hour. Specialist machine: The contract will require a specialist machine. The machine could be hired for R15000 or could be bought for R50 000. At the end of the contract if the machine was bought, it could be sold for R30 000. Alternatively, it could be modified at a cost of R5000 and used to other contracts instead of buying another essential machine that would cost R 4500 . The operating costs of the machine are payable by CDF whether it hires or buys the machine. These costs would total to R12000 in respect of the new contract. Supervisor The contract would be supervised by an existing manager who is paid an annual salary of R50 000 and has sufficient capacity to carry out this supervision. The manager would receive a bonus of R500 for the additional work. Development time 15 hours of development time at a cost of R3000 has already been worked in determining he resource requirements for the contract. ADVANCED DIPLOMA IN FINANCIAL MANAGEMENT-ACADEMIC AND ASSESSMENT CALENDAR DISTANCE The plant at site is to be depreciated at 10%. Prepare the contract account in respect of each contract showing the notional profit and the profit to be transferred to P&L a/c. [25]