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(b) Ahmed Manufacturing LLC is a specialty component manufacturer with idle capacity. Management would like...

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Accounting

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(b) Ahmed Manufacturing LLC is a specialty component manufacturer with idle capacity. Management would like to use its extra capacity to generate additional profits. A potential customer has offered to buy 1,600 units of component Y. Each unit of Y requires 8 units of material X and 1 unit of material Z. Data concerning these two materials are given below: Material Units in Stock Original Cost/Unit Current market Price/unit Disposal Value/unit 4,280 OMR4.20 OMR3.85 OMR3.65 Z 1,500 OMR9.30 OMR9.30 OMR7.95 Material X is in use in many of the company's products and is routinely re-stock. Material Z is no longer used by the company in any of its normal products and existing stocks would not be re-stock once they are used up. Calculate the minimum acceptable price for the order for component Y (7 marks)

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