Answer with steps thanks
Test your understanding 5 Mr Smith has been asked to quote a price for a special contract Hehas already prepared his tender but has asked you to review it for him He has pointed out to you that he wants to quote the minimum priceas he believes this will lead to more lucrative work in the future Mr Smith's tender 20,000 15,000 20,000 600 25,000 30,000 Material A 2,000 kgs @ $10 per kg B 1,000 kgs @ $15 per kg C 500 kgs @ $40 per kg D 50 litres @ $12 per litre Labour Skilled 1,000 hrs @ $25 per hr Semi-skilled 2,000 hrs @ $15 per hr Unskilled, 500 hrs @ $10 per hr Fixed overheads 3,500 hrs @ $12 per hr Costs of preparing the tender Mr Smith's time other expenses Minimum profit (5% of total costs) 5,000 42,000 1,000 500 7,725 Minimum tender price 166,825 Other information Material A 1.000 kgs of this material is in stock at a cost of $5 per kg Mr Smith has no alternative use for his material and intends selling it for 52 per kg However, if he sold any he would have to pay a fixed sum of $300 to cover de very costs The current purchase price is $10 per kg Minimum tender price 166,825 Other information Material A 1.000 kgs of this material is in stock at a cost of $5 per kg Mr Smith has no alternative use for his material and intends selling it for $2 per kg. . However, if he sold any he would have to pay a fixed sum of $300 to cover delivery costs. The current purchase price is $10 per kg. Material B There is plenty of Material B in stock and it cost $18 per kg The current purchase price is $15 per kg The material is constantly used by Mr Smith in his business Material The total amount in stock of 500 kgs was bought for $10,000 some time ago for another one-off contract that never happened Mr Smith is considering selling it for $6.000 in total or using it as a substitute for another material constantly used in normal production If used in this latter manner it would save $8,000 of the other material Current purchase price is $40 per kg Material There are 100 litres of this material in stock It is dangerous and if not used in this contract will have to be disposed of at a cost to Mr Smith of $50 per litre The current purchase price is $12 per litre. Skilled labour Mr Smith only hires skilled labour when he needs it $25 per hour is the current hourly rate Semi-skilled labour Mr Smith has a workforce of 50 semi-sited labourers who are currently not fully utilised They are on annual contracts and the number of spare hours currently available for this project are 1.500. Any hours in excess of this will have to be paid for halt . The normal hourly rate is 515 per hour Unskilled labour These are currently fully employed by Mr Smith on jobs where they produce a contribution of S2 per unskild labour hour. . Their current rate is $10 per hour, although extra could be hired at $20 an hour if necessary Fixed overheads This is considered by Mr Smith to be an accurate estimate of the hourly rate based on his existing production Costs of preparing the tender and of is dangerous and is not used in this contract with The current purchase price is $12 per litre cost to Mr Set of 50 per litro Skilled labour Mr Smith only hires skilled labour when he needs it 525 per hour is the current hourly rate. Semi-skilled labour Mr Smith has a workforce of 50 semi-skiled labourers who are currently not fully utilised They are on annual contracts and the number of spare hours currently available for this project are 1,500. Any hours in excess of this will have to be paid for at time and a The normal hourly rate is $15 per hour. Unsed labour These are currently fully employed by Mr Smith on jobs where they produce a contribution of S2 per unskilled labour hour . Their current rate is $10 per hour, although extra could be hired at $20 an hour if necessary Faced overheads This is considered by Mr Smith to be an accurate estimate of the hourly rate based on his existing production Costs of preparing the tender Mr Smith has spent 10 hours working on this project at $100 per hour, which he believes is his charge-outrale Other expenses include the cost of travel and research spent by Mr Smith on the project Prott This is Mr Smith's minimum profit margin which he believes is necessary to cover general day-to-day expenses of running a business Required Calculate and explain for Mr Smith what you believe the minimum tender price should be Test your understanding 5 Mr Smith has been asked to quote a price for a special contract Hehas already prepared his tender but has asked you to review it for him He has pointed out to you that he wants to quote the minimum priceas he believes this will lead to more lucrative work in the future Mr Smith's tender 20,000 15,000 20,000 600 25,000 30,000 Material A 2,000 kgs @ $10 per kg B 1,000 kgs @ $15 per kg C 500 kgs @ $40 per kg D 50 litres @ $12 per litre Labour Skilled 1,000 hrs @ $25 per hr Semi-skilled 2,000 hrs @ $15 per hr Unskilled, 500 hrs @ $10 per hr Fixed overheads 3,500 hrs @ $12 per hr Costs of preparing the tender Mr Smith's time other expenses Minimum profit (5% of total costs) 5,000 42,000 1,000 500 7,725 Minimum tender price 166,825 Other information Material A 1.000 kgs of this material is in stock at a cost of $5 per kg Mr Smith has no alternative use for his material and intends selling it for 52 per kg However, if he sold any he would have to pay a fixed sum of $300 to cover de very costs The current purchase price is $10 per kg Minimum tender price 166,825 Other information Material A 1.000 kgs of this material is in stock at a cost of $5 per kg Mr Smith has no alternative use for his material and intends selling it for $2 per kg. . However, if he sold any he would have to pay a fixed sum of $300 to cover delivery costs. The current purchase price is $10 per kg. Material B There is plenty of Material B in stock and it cost $18 per kg The current purchase price is $15 per kg The material is constantly used by Mr Smith in his business Material The total amount in stock of 500 kgs was bought for $10,000 some time ago for another one-off contract that never happened Mr Smith is considering selling it for $6.000 in total or using it as a substitute for another material constantly used in normal production If used in this latter manner it would save $8,000 of the other material Current purchase price is $40 per kg Material There are 100 litres of this material in stock It is dangerous and if not used in this contract will have to be disposed of at a cost to Mr Smith of $50 per litre The current purchase price is $12 per litre. Skilled labour Mr Smith only hires skilled labour when he needs it $25 per hour is the current hourly rate Semi-skilled labour Mr Smith has a workforce of 50 semi-sited labourers who are currently not fully utilised They are on annual contracts and the number of spare hours currently available for this project are 1.500. Any hours in excess of this will have to be paid for halt . The normal hourly rate is 515 per hour Unskilled labour These are currently fully employed by Mr Smith on jobs where they produce a contribution of S2 per unskild labour hour. . Their current rate is $10 per hour, although extra could be hired at $20 an hour if necessary Fixed overheads This is considered by Mr Smith to be an accurate estimate of the hourly rate based on his existing production Costs of preparing the tender and of is dangerous and is not used in this contract with The current purchase price is $12 per litre cost to Mr Set of 50 per litro Skilled labour Mr Smith only hires skilled labour when he needs it 525 per hour is the current hourly rate. Semi-skilled labour Mr Smith has a workforce of 50 semi-skiled labourers who are currently not fully utilised They are on annual contracts and the number of spare hours currently available for this project are 1,500. Any hours in excess of this will have to be paid for at time and a The normal hourly rate is $15 per hour. Unsed labour These are currently fully employed by Mr Smith on jobs where they produce a contribution of S2 per unskilled labour hour . Their current rate is $10 per hour, although extra could be hired at $20 an hour if necessary Faced overheads This is considered by Mr Smith to be an accurate estimate of the hourly rate based on his existing production Costs of preparing the tender Mr Smith has spent 10 hours working on this project at $100 per hour, which he believes is his charge-outrale Other expenses include the cost of travel and research spent by Mr Smith on the project Prott This is Mr Smith's minimum profit margin which he believes is necessary to cover general day-to-day expenses of running a business Required Calculate and explain for Mr Smith what you believe the minimum tender price should be
