Task 1 The production manager of your company has approached you for advice on a special order for an overseas customer that he intends to tender for. He has supplied the following cost estimates: Material A MaterialB Direct Labour Supervision cost 4,000 8,000 6,000 2,000 Variable overbead 12.000 32.000 You ascertain the following (1) Material A is in stock and the original cost is given above. for material A, apart from using it on the special order within the factory and it would cost 1,750 to dispose of. Material B would have to be ordered at the cost shown above. There is no other use 2) Direct labour costs of 6,000 relate to workers who will be transferred to the special order from another project. Extra labour will need to be recruited to the other projects at a cost of 7,000. sis of 33,% of staff within their normal (3) Supervision been charged to the project on the ba labour costs costs have labour costs. Supervision will be carried out by existing (4) Variable overheads have been charged to the project at the rate of 200% on direct labour (5) The project will need machinery that will have no other use to the company apart from the special order. The machinery will have to be purchased at a cost of 10,000 and then disposed of for E5,250 when the special order is completed The production manager tells you that the overseas customer is prepared to pay up toa maximum of 30,000 and he has been informed that a competitor is prepared to fulfill the order at that price. His costing indicates that he cannot charge less than 40,000 and this does not take into consideration the cost of the machine and profit to be taken on the project Required (a) Cost the project for the production manager, clearly stating how you have amived at your figures and giving reasons for the exclusion of other figures (10 marks) (b) State whether the and the price, bearing in mind that the competitor is prepared to undertake the project for 30,000. company should tender for the project, giving the reasons why (6 marks) (c) Identify four non-monetary factors that should be taken into account before tendering for this project (4 marks)