Case Study: Sky Fighters Inc.

Pages: 5 (1047 words) Published: January 26, 2018

For Sky Fighters Inc, I would compare the costs and prices of my services, taking into account the costs of other offices like mine. We all know that the price is the sum of cost and profit. Therefore the forecast of the price depends on the price comparison of competition, considering that this company offers a similar service like mine. All business involves two types of costs: fixed costs and variable costs, so it is important to distinguish between reasonable, allowable, and allocable costs.
Cost reasonableness is a matter of common sense. In the case of Sky Fighters Inc which mainly deals with the government in contracting for special products and services and there isn’t much competition, we may need to be more vigilant when forecasting...

The only time it can change is if the company moves to a new building, larger building or builds a new building. Top level management cost is another fixed cost and will most likely remain the same for a years time.
Semi-variable costs are both fixed and partly variable, these include electricity, which price depends on the usage, but the company still pays a standard monthly fee this also pertains to any utilities the company has to run an office environment or production facility.
Most ordinary expenses are allowable under FAR Part 31. (Murphy, 2009) A cost is allowable if it is expressly identified as allowable in the cost principles or if not addressed in the cost principles, but meets the requirements of the three relevant tests, terms of the contract, reasonableness, allocability, and proper allocation of...

A particular price will be reasonable if responded by different suppliers at different times because the company will now be in a better position of determining if the price required of them is reasonable. The total cost of acquiring a commodity from different suppliers has to be well analyzed to ensure that cost is not so high with a low rate of revenue. This will negatively affect the company and it will not be in a good position of paying tax to the government. Lower costs will mean that the performance of the products is to the right standards at the additional cost that could be incurred is not used in improving other areas of the business. A particular statement is required to explain why a particular commodity is assessed and not the other commodity. All the advantages towards the selection of the commodity are well analyzed to ensure that the best is given out and suppliers are encouraged to supply more of the product.
Cost Analysis and Price Analysis are two critical and essential tools used in assessing fairness and reasonableness of proposed prices They must be understood by buyers and sellers in all government contracting situations by the government contracting officers, and...
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