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Rainbow Ltd has been offered a contract that will last six months. The contract will use two employees who are currently on zero-hours contracts paid
Rainbow Ltd has been offered a contract that will last six months. The contract will use two employees who are currently on zero-hours contracts paid 26 per hour each. The hours to be spent on the contract will be 1722 hours. The price of the contract is 150,000. The rent on a building used for the contract costs 83178 per year, and the space allocated to the contract is 29% of the total floor area; the rental contract is not affected by the acceptance or rejection of the contract. Other costs for the contract include depreciation of 21506 on a machine. If the machine is not used on the contract it will be scrapped as it has no other use. Using relevant costing techniques, what is the benefit to Rainbow Ltd of accepting the contract
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