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What is the minimum acceptable price of the special contract

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Reference no: EM132522036

Question - Company SMART has a wage rate of £12 per hour, and variable overhead of machine time costs of 0.75p per hour. SMART has been approached by a business customer to tender for a special contract to supply goods requiring £6000 of materials, 1000 hours of labour and 1000 machine hours. Machine hours are the only scarce resource.

Required -

Q1. What is the minimum acceptable price of the special contract?

Q2. What is the opportunity cost associated with the contract?

Reference no: EM132522036

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