Sale price

Gas reservoirs are produced by expansion of the gas contained in the reservoir. The high compressibility of the gas relative to the water in the reservoir (either connate water or underlying aquifer) make the gas expansion the dominant drive mechanism. Relative to oil reservoirs, the material balance calculation for gas reservoirs is rather simple. A major challenge in gas field development is to ensure a long sustainable plateau (typically 10 years) to attain a good sales price for the gas the customer usually requires a reliable supply of gas at an agreed rate over many years. The recovery factor for gas reservoirs depends upon how low the abandonment pressure can be reduced, which is why compression facilities are often provided on surface. Typical recovery factors are In the range 50 to 80 percent. 

Table 4. Worldwide 1992 Production and Sale Price for Fermentation Products ...

Unit sales prices of from 800 to 900 fine chemicals are fisted weekly in the Chemical Marketing Reporter. This number reflects those fine chemicals produced and sold in industrial quantities. Some market studies on fine chemicals, fisting important product families, such as side chains for P-lactam antibiotics (qv). A/- and A-heterocycfic compounds, fluoroaromatics, etc, do exist (14,15). 

The sale of hides is on a weight basis. The value of a hide depends on the type of animal, the seasonal characteristics, the location of the slaughter, the type of cure, and the market conditions. Cost of the hides is about 50% of the sale price of the leather, so an accurate knowledge of the hides and the leathermaking potential of the hides is critical to commercial success. In the case of furs and exotic skin leather production, the value of the pelt is by far the most important factor (7). 

Type World capacity, t Average sales price, /kg... 

When goods consigned to a shipper s warehouse or terminal are damaged, disputes frequentiy arise as to their value. Usually, the carrier contends that shippers should not earn profit on sales not made, and the shipper contends that it should not be required to produce goods merely to recover its costs. Such disputes are sometimes resolved by payment of the sales price less costs not incurred, such as the cost of deHvery from the warehouse to the consignee. 

Production is practiced at many hundreds of metric tons annually by batchwise or semicontinuous operation in automated glass and stainless steel equipment typical of fine chemical manufacture. World production in 1995 was estimated at about 3000 MT with sales prices in the United States in the range of 22— 30 per kilogram. 

Contribution and Breakeven Charts These can be used to give valuable preliminary information prior to the use of the more sophisticated and time-consuming methods based on discounted cash flow. If the sales price per unit of sales is Cs and the variable expense is Cy per unit of produc tion, Eq. (9-7) can be rewritten as... 

Sensitivity Analysis An economic study should pinpoint the areas most susceptible to change. It is easier to predict expenses than either sales or profits. Fairly accurate estimates of capital costs and processing costs can be made. However, for the most part, errors in these estimates have a correspondingly smaller effecl than changes in sales price, sales volume, and the costs of raw materials and distribution. 

Another important fac tor is the tendency of product prices to faU as the total national or international volume or produc tion increases. Sales prices may faU by 20 percent for a doubling in volume or produc tion. 

Predictions from Limited Data Predictions of future sales price, sales volume, etc., are normally based on a very hmited amount of data about past events. Furthermore, it would not be convenient to use the entire population of past events even if it were available. A statistic is a measure, based on limited information from a sample, that allows the corresponding parameter of the population to be estimated. 

The estimated (DCFRR) and the estimated (NPV) are both functions of the estimated cumulative revenue from annual sales X As, the estimated cumulative total annual cost or expense X Ate, and the estimated fixed capital cost Cfc of the plant. The revenue from annual sales for each year is in turn the product of the sales price and sales volume. Initially it is desirable to select those values from the distribution cui ves of X As, X Ate, and Cfc which enable the maximum and minimum (DCFRR) and (NPV) to be calculated. 

The revenue from annual sales As of a product at an annual production rate R and sales price of c, per unit of production is... 

Differential inflation, on the other hand, can affect the measured-survival function. We shall assume, for instance, that the sales price per unit product Cs in Eq. (9-II9) is frozen at a constant level while some or of the production costs are allowed to rise. This causes the value of T to decrease therefore, (MSF) likewise decreases, as can be seen from Eq. (9-117). 

If the sales volume exceeds the annual production rate by 10 percent and the inventory is valued at the sales price, then Eq. (9-153) shows that the profit margin is (A vf/As)100 = 0 percent. If the inventory is valued at the total variable cost, then the profit margin (A vf/As)100 = (0.1)(1 — 0.7) (100) = 3 percent. Hence, the value of the inventoiy is of vital importance. 

For a new produc4, the ratio of manufacturing expense to sales price Ch e/cs should be compared with the ratio of total manufacturing cost or expense to sales revenue for the company as a whole. If the ratio Ch e/cs is less than or equal to the ratio for the company, then the proposed sales price appears to be reasonable and the product is probably commerci ly viable. This comparison is, of course, used only as an approximate guide in preliminary assessments. 

Miscellaneous Direct Costs Estimates for the cost of maintenance and repairs, operating supplies, royalties, and patents are best based on company records for similar processes. A rough average value for the annual cost of maintenance is 6 percent of the capital cost of the plant. This percentage can vaiy from 2 to 10 percent, depending on the severity of plant operation. Approximately half of the maintenance costs are for materials and half for labor. Royalty and patents costs are in the order of 1 to 5 percent of the sales price of the product. 

Let us consider a change in annual production rate to ft -I- AR. In order to maintain the gross profit per unit as Acp/R, the sales price per unit of produc tion would need to be Cs Acs- For this case Eq. (9-210) can be written in the modified form... 

Absorption pricing is rigid and arbitrary and may result in business being turned away if the fixed sales price Cs cannot be obtained even though the business may give a usefiil contribution to fixed costs. 

Revenue from sales Sales price Sales volume... 

Diameter, ft Overall cylinder length Heated cylinder length Cylinder drive motor hp Approximate Shipping weight, Ih Approximate sale price in carbon steel constructionf Approximate sale price in No. 316 stainless construction... 

Rarely is a balanced o-ring cartridge seal supplied as standard equipment with a new pump. It s thought that they cost too much and will raise the sale price of the pump. 

Several rules of thumb have been developed for estimating operating costs. For instance, Grumer (Reference 3) suggests that the raw material costs can be estimated as a percentage of the sales price of the finished product. Correlations have been made that indicate the overall operating costs can be related to the lbs of products, i.e., the total operating costs are a constant cents/lb of finished product. This obviously will work only when history can be used to get the recent cost on a similar plant. 

Revenues. The selling price for the major product and the quantity to be sold each year must be estimated. If the product is new, this can be a major study. In any case, input is needed from sales, transportation, research, and any other department or individual who can increase the accuracy of the revenue data. The operating costs may be off by 20% without fatal results, but a 20% error in the sales volume or price w ill have a much larger impact. Further, the operating costs are mostly within the control of the operator, while the sales price and volume can be... 

The difference between the actual sales price of the liquid and the break-even price of the liquid in Table 9-3 provides the income to pay out the capital cost, fuel cost, and other operating and maintenance expenses necessary to make the recovery of the gas economically attractive. 

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