SU 1. Gonti VON 2.1 Lombard Ltd has been offered a contract for which there is available production capacity. The contract is for 20.000 identical Items, manufactured by an intricate assembly operation, to be 20000 produced and delivered in the next few months at a price of 80 each. The specification for one item is as follows: Assembly labour 4 hours Component 4 units Component Y 3 units There would also be the need to hire equipment, for the duration of the contract, at an out- lay cost of 200,000, The assembly is a highly skilled operation and the workforce is currently undertilised. It is the business's policy to retain this workforce on full pay in anticipation of high demand next year, for a new product currently being developed. There is sufficient available skilled labour to undertake the contract now under consideration. Skilled workers are paid 215 an hour. Component X is used in a number of other subassemblies produced by the business. It is readily available, and 50,000 units of Component X are currently held in Inventories. Lombard Ltd made a special purchase of Component Y in anticipation of an order that did not in the end materialise. It is therefore, surplus to requirements and the 100,000 units that are currently held may have to be sold at a loss. An estimate of various values for Components X and Y provided by the materials planning department is as follows: Y 30.60 St= 3:09 Component X /unit /unit 4 Historic cost Replacement cost Net realisable value $ 3 10 11 8 SU 1. Gonti VON 2.1 Lombard Ltd has been offered a contract for which there is available production capacity. The contract is for 20.000 identical Items, manufactured by an intricate assembly operation, to be 20000 produced and delivered in the next few months at a price of 80 each. The specification for one item is as follows: Assembly labour 4 hours Component 4 units Component Y 3 units There would also be the need to hire equipment, for the duration of the contract, at an out- lay cost of 200,000, The assembly is a highly skilled operation and the workforce is currently undertilised. It is the business's policy to retain this workforce on full pay in anticipation of high demand next year, for a new product currently being developed. There is sufficient available skilled labour to undertake the contract now under consideration. Skilled workers are paid 215 an hour. Component X is used in a number of other subassemblies produced by the business. It is readily available, and 50,000 units of Component X are currently held in Inventories. Lombard Ltd made a special purchase of Component Y in anticipation of an order that did not in the end materialise. It is therefore, surplus to requirements and the 100,000 units that are currently held may have to be sold at a loss. An estimate of various values for Components X and Y provided by the materials planning department is as follows: Y 30.60 St= 3:09 Component X /unit /unit 4 Historic cost Replacement cost Net realisable value $ 3 10 11 8