Whisper Ltd is an electronics company that has been approached by the managers of Vision+ for an order for 5000 units of

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Whisper Ltd is an electronics company that has been approached
by the managers of Vision+ for an order for 5000 units of a new
sound bar system named SoundBar B at a price of £120 per unit.
Materials Whisper Ltd currently has in stock the quantity of hard
plastic needed to manufacture the soundbars. This plastic was
bought at £205,000. If the project is not undertaken, Whisper Ltd
would find no use for the plastic; so, the company would resell it
at £100,000. Other materials of SoundBar B currently available in
stock and used frequently by Whisper Ltd, include: 1. Metal for the
grille: the quantity required for this order is 250kg. the original
cost was £30 per kg and the replacement cost is £35 per kg. 2.
Grille cloth: the quantity required for this order is 150m2. The
original cost was £22 per m2 and the replacement cost is £21 per m2
Labour Labour is currently working at full capacity. If Whisper Ltd
accept the order, it would need to hire hourly-paid staff for the
entire 1500 hours of labour this order needs to be completed. The
hourly rate for this extra staff will be £30.50 per hour. Machinery
To fulfil the order Whisper Ltd decided to use a machine that has
been sitting idle for the last 3 months. That machine has a book
value of £630,000 and depreciates at a rate of £5250 per month;
which is the time it would take to fulfil the order. The machine
would be kept for future use if this order is not accepted.
Overheads General overheads (to cover other costs not discussed
above) would amount to £150,000. Page 10 of 21 Required: a) Prepare
a historic costing statement and an alternative costing statement
for the Vision+’s order based on relevant costs. (10 marks) b)
Comment on the rationale behind your decision to include or exclude
each cost. (5 marks) c) While referring to your calculation explain
why it is important to consider the relevant costing principles in
a decision-making context (5 marks)