Case Study – Shower Screens
John works for a company that manufacturers shower screens. He is the Cost Centre Manager for the production area. For the four products they manufacture, sales at the end of February are in the table below:
Product
Unit
Value ($)
Basic
150
37,500 (250 per unit)
Standard Plus
250
125,000 (500 per unit)
Deluxe
200
150,000 (750 per unit)
Super Deluxe
100
100,000 (1,000 per unit)
The above production is standard from month to month and the costs involved are below:
Product
Labour per unit (hours)
Material cost per unit ($)
Overhead contribution per unit ($)
Basic
2.0
100
10
Standard Plus
3.0
250
20
Deluxe
4.0
480
34
Super Deluxe
5.0
600
43
Labour is costed at $50 per hour and includes contributions to leave entitlements and superannuation. Material costs are fixed with a supply contract for the standard quantities required each month.
John is advised that the company is just one extra for the supply of shower screens for a refit of a hotel, and the products are required by the end of March. The quantities and the agreed price per unit are below.
Product
Required units
Price agreed per unit ($)
Basic
30
275
Standard Plus
50
550
Deluxe
10
750
Super Deluxe
5
900
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