QUESTION Proven Ltd manufactures special-purpose computers according to customer specifications. The company operated at 70% of practical capacity in 2017 with the following results: Sales Less sales connussions ( 10%) Net sales 12.500 1.250 11.250 Expenses Direct material Direct labour Manufacturing overhead Manufacturing overhead Corporate administration Total costs Profit before tax Profit tax (40%) Net profit 3,000 3.750 1.125 750 variable fixed fixed 9.000 2.250 900 1.350 The variable overhead was 30% of direct labor. Proven Ltd expects continued operations at 70% of capacity. In January 2018. Proven Ltd submitted a bid of S82.500.000 on a special-purpose computer for Kowloon Bank. Proven Ltd used a pricing formula in deriving the bid amount which was based on 2017's operating results. The company can still operate under full capacity with the acceptance of new order Estimated direct material Estimated direct labour Estimated manufacturing overhead at 50% of direct labor Estimated corporate overhead at 10% of direct labor Estimated total costs excluding sales commissions Add 25% for profit and taxes Suggested price (with profit) before sales commission Suggested total price ($74.250 90%) to adjust for commission S'000 14.600 28,000 14.000 2.800 59.400 14.850 74.250 82.500 P.1