Problem 18

Problem 18 - \$26,000 Maximum allowable return(15 3,900...

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Problem 15-40 (25 minutes) 1. Direct-labor hours (DLH) required for job = = 500 DLH Traceable out-of-pocket costs: Direct labor (\$16.00 × 500) . .................................. \$ 8,000 Variable overhead (\$12.00 500) . ......................... 6,000 Administrative cost . ............................................... 2,000 Total traceable out-of-pocket costs. ...................... \$16,000 Minimum price per dose = = = \$.016 2. As in requirement (1), 500 direct-labor hours are required for the job. Direct labor (\$16.00 500) . ..................................... \$ 8,000 Variable overhead (\$12.00 500) . ............................ 6,000 Fixed overhead (\$20.00 500) . ................................ 10,000 Administrative cost . ................................................. 2,000 Total cost . .............................................................

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Unformatted text preview: \$26,000 Maximum allowable return (15%) . ............................. 3,900 Total bid price . ...................................................... \$29,900 Bid price per dose = = = \$.0299 per dose Problem 15-40 (Continued) 3. Under the supposition that the price computed by Manhattan Pharmaceuticals, Inc. using Wyant’s criterion is greater than \$0.03, the factors that Manhattan’s management should consider before deciding whether or not to submit a bid at the maximum allowable price include whether Manhattan Pharmaceuticals has excess capacity, whether there are available jobs on which earnings might be greater, and whether the maximum bid of \$0.03 contributes toward covering fixed costs....
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Problem 18 - \$26,000 Maximum allowable return(15 3,900...

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