Case_study_11_Nanotech Inc

Prepare an analysis of the min acceptable price for

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Prepare an analysis of the min. acceptable price for the special order and indicate briefly your reasons for coming up with the amount you calculate. Nanotech Inc. Operating Income Performance Report (Current Format) 2010 2010 Budget Actual Variance Sales-units…………………………… 220,000 210,000 10,000 U Dollars (in ‘000s) Sales-Dollars………………………... $5,500 $5,333 $ 167U Cost of Sales: Materials…………………… 880 860 * 20 F Labour……………………… 1,760 1,782** 22 U Variable Factory Overhead… 440 442*** 2 U Fixed Factory overhead…….. 660 650 10 F 3,740 3,734 6 U Gross Profit………………………… 1,760 1,599 161U Selling Expenses: Variable…………………… 440 418 22 F Fixed……………………… 200 204 4 U Administration-Fixed……. 300 297 3 F 940 919 21F Operating income …. $ 820 $ 680 $140U Sales are assumed to equal production so there is no change in inventory levels *purchased and used 80,000 kg at a purchase cost of $ 860,000. ** based on 108,000 direct labour hours actually worked *** manufacturing overhead is applied on the basis of direct labour hours Standard Costs on which the Budget is Based Selling Price…………………………………… $25 Direct Material (0.4 kg at $10/kg) * …………… $ 4 Direct Labor (0.5 hour at $16 per hour)……….. $ 8 Variable Overhead (0.5 hour at $4 per hour)……. $ 2 Denominator output is 220,000 units
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  • Winter '12
  • Farrar
  • Revenue, ........., Overhead information, Nanotech Inc.

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