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Question Lusaka Water and Sewerage Company (SWASCO) is a regional supplier of water for domestic use. The Company has engaged sub-distributors in some of the townships it is supposed to cover SWASCO allows it's sub-distributors to charge a 25% mark up of agreed costs. The agreed costs that can be incorporated into any calculation of mark up are only labour costs, material.costs, variable overheads, fixed overheads and machine rentals SWASCO has been approached by Natural Water Resource Company (NWRCO) one of its sub distributors, with a proposal to increase output to meet a further domestic customer base not previously supplied with water. The company (SWASCO) would have to increase its capacity to meet this demand and increased demand from existing customers. Water output is measured in units, with each unit being 1000 litres SWASCO is currently operating at capacity which is 80,000 units per annum as determined by processing capacity Increasing processing capacity would require the rental of further machines that are involved in the chemical cleaning of water. There is an overall maximum capacity of 200,000 units beyond which the company cannot produce water because of physical limitations of it's production site. Each water cleaning machine has the following rental and unit capacity details Water Cleaning Machine Annual rental (ZMW) 22,000 Maximum annual capacity units) 45,000 SWASCO has an existing budgeted direct cost structure based on it's current level of output of 80.00 units, as follows: ZMW Unir Labour grade 1 45.00 Labour grade 2 64.00 Material A costs 23.85 Material costs 62.25 Variable overheads (clectricity, maintenance etc) are absorbed at the rate of ZMW2.00 per kg of material Bused. SKg of material B is used in the manufacture of 1000 litres of water. Find overheads are based on an existing output of 80,000 units an are absorbed at the rate of ZMW10.30 per unit. Above 160,000 units, fixed overheads would be expected to increase at the rate of ZMW 50.000 per annum for every additional 40,000 units produced or part thereof. The existing agreement that SWASCO will charge 25% mark up of agreed costs will apply for this proposal. The assunse of this it's current level of output of 600 M. Laherade 45.00 La MA 235 Meralco there ZMW ZOEK kated Skg of material bed in the misture of 1000 litres of overbeads abgpt of 0.000 se aborted the rate of MW100 wit Above 100.000, fived overheads would be exposed to Incre at the MWS0000 every additional 0.000 units produced to put there. The ingreement SWASCO will change marked agreed costs will apply for the peoposal. The case of the propoul would not affect changes to the citing Domestic demand for in the next you in the com bone is expand cut total 110,000 singly present. This level afdeli is expected Cote for the follow. Wikipal requirements etmated at 15% of les value and required to be in place de start of the pred which war. Capital htfZMW 5 would be required in order to expand capacity to wipe Theater updating consFZMWON quired as the end of every four years. The cost of capital App Alles on beide toate the lofte yerlesherwiel th mrr , save the people capacity valumbo Make your valtion on du bois of a five Express all calculations in this part of the question to the MW1.000. Students ande as to your capacity astrona report to the The limited the five year perioden. The problems and difficulties citesh forecasting The choice of income Ally quite you feel righe influence Te Managing Director blevet til foreca dersen ove better folosing pw. Sie has requested you to forecasted for the Quarter of year forecasting country demand, the folle quarter online should be made to Pawan alan Hound Os the compone de 200.00 191, pat foten of your frictly to your Question Lusaka Water and Sewerage Company (SWASCO) is a regional supplier of water for domestic use. The Company has engaged sub-distributors in some of the townships it is supposed to cover SWASCO allows it's sub-distributors to charge a 25% mark up of agreed costs. The agreed costs that can be incorporated into any calculation of mark up are only labour costs, material.costs, variable overheads, fixed overheads and machine rentals SWASCO has been approached by Natural Water Resource Company (NWRCO) one of its sub distributors, with a proposal to increase output to meet a further domestic customer base not previously supplied with water. The company (SWASCO) would have to increase its capacity to meet this demand and increased demand from existing customers. Water output is measured in units, with each unit being 1000 litres SWASCO is currently operating at capacity which is 80,000 units per annum as determined by processing capacity Increasing processing capacity would require the rental of further machines that are involved in the chemical cleaning of water. There is an overall maximum capacity of 200,000 units beyond which the company cannot produce water because of physical limitations of it's production site. Each water cleaning machine has the following rental and unit capacity details Water Cleaning Machine Annual rental (ZMW) 22,000 Maximum annual capacity units) 45,000 SWASCO has an existing budgeted direct cost structure based on it's current level of output of 80.00 units, as follows: ZMW Unir Labour grade 1 45.00 Labour grade 2 64.00 Material A costs 23.85 Material costs 62.25 Variable overheads (clectricity, maintenance etc) are absorbed at the rate of ZMW2.00 per kg of material Bused. SKg of material B is used in the manufacture of 1000 litres of water. Find overheads are based on an existing output of 80,000 units an are absorbed at the rate of ZMW10.30 per unit. Above 160,000 units, fixed overheads would be expected to increase at the rate of ZMW 50.000 per annum for every additional 40,000 units produced or part thereof. The existing agreement that SWASCO will charge 25% mark up of agreed costs will apply for this proposal. The assunse of this it's current level of output of 600 M. Laherade 45.00 La MA 235 Meralco there ZMW ZOEK kated Skg of material bed in the misture of 1000 litres of overbeads abgpt of 0.000 se aborted the rate of MW100 wit Above 100.000, fived overheads would be exposed to Incre at the MWS0000 every additional 0.000 units produced to put there. The ingreement SWASCO will change marked agreed costs will apply for the peoposal. The case of the propoul would not affect changes to the citing Domestic demand for in the next you in the com bone is expand cut total 110,000 singly present. This level afdeli is expected Cote for the follow. Wikipal requirements etmated at 15% of les value and required to be in place de start of the pred which war. Capital htfZMW 5 would be required in order to expand capacity to wipe Theater updating consFZMWON quired as the end of every four years. The cost of capital App Alles on beide toate the lofte yerlesherwiel th mrr , save the people capacity valumbo Make your valtion on du bois of a five Express all calculations in this part of the question to the MW1.000. Students ande as to your capacity astrona report to the The limited the five year perioden. The problems and difficulties citesh forecasting The choice of income Ally quite you feel righe influence Te Managing Director blevet til foreca dersen ove better folosing pw. Sie has requested you to forecasted for the Quarter of year forecasting country demand, the folle quarter online should be made to Pawan alan Hound Os the compone de 200.00 191, pat foten of your frictly to your