$800,000 of lost sales as being much less than the dollar amount of lost sales. ED’s record on profits is abysmal. Most years ED lost money. Therefore, one could argue that the $800,000 of lost sales would have resulted in no profits at all. At a maximum, the lost profits would be some small percentage of the $800,000 of sales. The documents that show that AA management just wanted out of the contract and that AA lost money • on the contract may have been instrumental in determining liability in the dispute, but this information is of no value for the damage estimate process. The issue of liability associated with the alleged decline in the value of the assets because of the • bankruptcy is a stretch of the imagination. In order for this argument to have any merit at all, the court would have to find that the default on the AA/ED delivery contract was the basis for the ED bankruptcy. The earnings (loss) data show that ED was never a profitable company. They lost money in most years identified in this situation. It is highly unlikely that this contract, which only accounted for 20 percent of ED’s delivery requirements would have made any difference in the firm’s ability to survive. If the court did find a link between the AA contract tort and the ED bankruptcy, one would want to see a wide variety of ED accounting documents relating to asset valuation, depreciation, cost data by functional area, sales data, asset appraisal information, and probably some other information as well. In summary, AA’s damage exposure is most likely limited to the incremental costs that ED had to cover • the last two years of the contract’s life. 21. Cost to sandblast and recoat shipping containers $540,000 a. We need to know what makes up this cost. Is there a job cost sheet or some other work order(s) that support this cost? Because the following item is the cost of coating materials, this may only be the labor and overhead cost. If all 500 of the units were sandblasted and recoated, the average unit cost is $1,080. Is that high in comparison with regular production costs? So we would want to see cost data for ‘‘normal’’ coating and sandblasting activities. Cost of coating materials $160,000 For this cost we want to see invoices and paid receipts. Data already presented indicates that IPPC did not charge Fernald for the coating materials. Therefore, this cost damage makes little sense. Cost of lost production $800,000 This amount is an opportunity cost. Fernald would not have an account that directly gave us this information. Evaluate sales reports that indicate that there were customers who were waiting for products that Fernald could not deliver. Mere delays in delivery would not count here. Find sales that were lost because of the refinishing of the 500 units. Cost of labor inefficiencies $490,000 Look at the labor efficiency reports relating to this project. In addition, find the labor efficiency reports for other production activities. This information would give us some insight into whether the labor inefficiencies alleged to have occurred in this situation were unique or a common occurrence.