Poullus Limited (PL), a high-tech electronics manufacturing company, is currently operating at 70% of its maximum capacity. A new customer in Lesotho has asked PL to provide a special order for 200 virtual reality headsets at R2,500 per unit. The potential customer is not a current customer of PL, but the directors of PL are keen to try and win the contract as they believe that this may lead to more contracts in the future from Lesotho. As a result, they intend pricing the contract using relevant costs. 800 kilograms of material B will be required. This material will have to be purchased for the contract because it is not otherwise used by PL. The minimum order quantity from the supplier is 1 000 kilograms at a cost of R180 per kilogram. PL does not expect to have any use for any of this material that remains after this contract is completed.
Poullus Limited (PL), a high-tech electronics manufacturing company, is currently operating at 70% of its maximum capacity. A new customer in Lesotho has asked PL to provide a special order for 200 virtual reality headsets at R2,500 per unit. The potential customer is not a current customer of PL, but the directors of PL are keen to try and win the contract as they believe that this may lead to more contracts in the future from Lesotho. As a result, they intend pricing the contract using relevant costs.
800 kilograms of material B will be required. This material will have to be purchased for the contract because it is not otherwise used by PL. The minimum order quantity from the supplier is 1 000 kilograms at a cost of R180 per kilogram. PL does not expect to have any use for any of this material that remains after this contract is completed.
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