Exempt VAT (UK variant)

I do not understand the questions below:

Existing Biz New Contract
Sales 210,000 80,000
Less : Materials, wages and overheads (120,000) (35,000)
Profit per accounts and taxable profits 90,000 45,000

Supplies made under the contract will be 65% standard rated and 35% exempt for VAT purposes ; this is the same as for the existing biz. 31,500 of the cost incurred in relation to the contract will be subject to VAT at the standard rate. The equivalent figure for the existing biz is 100,000.

Answer:
The total exempt input tax is no more than 625 per month on average and no more than 50% of its input tax (de minimis test) is as follows (for existing biz):

Exempt supplies : 100,000 x 20% x 35% = 7000
This is both less than 50% of the total VAT and below the de minimis limit of 625 x 12 = 7500, so the test is satisfied as a result all of these is recoverable in full.
[/i](Extracted from ACCA past year questions)

[/b]Why 100,000 of the cost which is supposedly subjected to the VAT at standard rate is used to calculate the exempt supplies??

Isn’t 100,000 as a whole should be at standard rated and the balance of the cost would be the exepmt supplies?