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Question - The vaccination program would also include the company's supply chain. ECW Bhd is (ECW) looking to vaccinate all its workers and their families.
This is necessary to ensure no "downtime" (closure of factory) during future MCOs. In all 3,000 persons will be vaccinated and the program will cost ECW RM3 million.
The management has asked you for your opinion on the profitability of the program. ECW has RM40 million sales a month. Variable costs are 60% of sales figure. ECW has a fixed overhead of RM10 million monthly.
It is estimated that if ECW did not do the vaccination, it will encounter downtime of 1 month in the future.
Required -
a. Define "relevant information".
b. Calculate the relevant cost of shutting the factory down for 1 month.
c. Discuss your recommendation based upon b. above.
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