Reference no: EM132604478

Dursley Ltd is a research business that has invested pound

• £ ?70,000 to date in developing a new type of cream to arrest the effects of ageing on the skin. The research has not been entirely successful as there has been no interest in the new cream from healthcare businesses.? Recently, however, a cosmetics business has made enquiries about the cream and its potential as a sun blocker.

Dursley Ltd believes that there is such potential for the? cream; however, further research would have to be carried out. The business would have to extend the research contracts of two research chemists for a further year at a total cost of pound

• £ ?80,000. The research chemists are due to be made redundant at a total cost of pound
• £ ?30,000. ?However, if the contract is extended the total redundancy cost will be pound
• £ ?40,000 at the end of the contract.
• The further research that will have to be carried out will take up one quarter of the laboratory space available within the business. The business rents the laboratory at an annual cost of pound £ ?60,000 per year.

Question 1: What is the minimum price that Dursley Ltd could charge the cosmetics business to justify the additional? research? ?(Ignore the time value of? money.)

A. £90,000

B. £135,000

C. £105,000

D. £205,000

Question 2: Why the final charge ignore the additional rent cost