Relevant Costing Question QI An offer involves the production of 100,000 units of item which will be sold at Ghc 6 per unit. The following data are relevant: Materials: the production requires three types of material A, B and C, Material A is used regularly in the business and material B is currently being held as surplus stock as a result of buying on earlier contract. Thus, material is not used regularly by the company and thus could sell if not required for the order. Material C would have to be bought in specially for the order since the item is not normally held. The following data has been recorded: Material Required per Current stock Original cost Replacement Realizable unit (kg) value (Ghc) 1.05 0.55 0.1 2.75 Gh ) cost (Ghe) 1.25 0.8 A B 200,000 30,000 Labour: in producing the product, half an hour of skilled labour and a quarter of unskilled labour would be required at a wage rate of the 3 per hour and Ghe 2 per hour respectively. One supervisor would be required full time at an annual salary of Ghc 7,000 and unskilled labour for the production would have to be recruited specially whilst 25,000 surplus unskilled labour hours expected to be available during the coming year if the order is rejected. However, the company policy dictate that no unskilled worker will be made redundant in the foreseeable future. The supervisor has agreed to delay immediate retirement for one year and to waive his annual pension of Ghc 4,000 in return for his annual salary during the period. Required: Determine the relevant cost for the offer