Task 2b:

OBJECTIVE:

To enable learners to identify the relevant costs and benefits from costs and revenue information available in the financial database to aid decision-making in a timely manner.

REQUIREMENT:

Short-term decision-making Question

NiceView Company manufactures custommade photographic equipment. NiceView received a special order enquiry from a potential client, a company in Kota Bharu, interested in photographic equipment similar to the equipment NiceView made to earlier clients. NiceView submitted a bid of $29,500. The following cost data relate to the bid submitted to the company in Kota Bharu.

Direct Material A $4,500 Direct Material B 6,000

Direct Labour 7,500

$18,000

Manufacturing overhead 5,600

(20% direct labour costs) $23,600

NiceView adds a 25% profit margin to all jobs, computed on the basis of the total cost. In this client's case, the profit margin amounted to $5,900 (23,600

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