Uy Ullal Uustoms Micor Engineering has been asked to provide a quotation for an engineering project that will take one year to complete. An analysis of the project has already been completed and the following resource requirements have been identified: 1. A specialised machine will be required for a total of 12 weeks. Two of these weeks are at the start of the project and three of them are at the end. The machine could be hired in from a reputable supplier, who would guarantee its availability when it is required, for R25 000 per week. Alternatively it could be purchased at a cost R2 million. If it were purchased it could be sold in one year's time for R1,2 million. If the machine were purchased it could be hired out to other companies for R15 000 per week and it is believed that it would be hired out for a total of 30 weeks. 2. The machinery has a running cost of R5 000 per week. The user of the machine incurs this cost. 3. Skilled labour would be required for a total of 9 000 hours during the year. The labour required could be recruited at an hourly rate of R500. Alternatively some of the employees currently working on other projects within the company could be transferred to this project. Their hourly rate is R400 per hour. If these existing employees were to be transferred to this project then they would need to be replaced on their existing project work. Replacements for their existing project work would cost R450 per hour. 4. Unskilled labour would be required for a total of 12 000 hours during the year. These employees would need to be recruited on a one-year contract at a cost of R50 per hour worked 5. The project would need to be supervised and it is estimated that there would be a total of 500 hours of supervision required during the year. One of the existing supervisors could undertake this work, but if he did so he would have to work a total of 300 hours overtime during the year to carry out the supervision on this project as well as his existing duties. The supervisor ears a salary of R500 000 per year for working 2 000 hours and is not paid for overtime work. If this project goes ahead the supervisor will be paid a bonus of R50 000 which would not be paid if the project is not undertaken 6. The total amount of direct materials required for the project would have to be purchased at a cost of R120 000 7. The company has already incurred expenditure of R200 000 in analysing the resource requirements of the project. Ignore taxation REQUIRED Marks Sub- Total total 15 15 (a) Prepare a statement that shows the relevant cost of the project. For each of the resources indicated in notes (1) to (8) you must clearly explain the reason for the cost value that you have used TOTAL MARKS 15