Performance and Motivation Refer to Problem 14-27.

1. Assume that Ralph is approached at the beginning of the period and offered 2,000 units at $44 each as a bargain one-shot purchase. The units will be delivered immediately and placed in Ralph’s warehouse by the vendor, so Ralph’s P = zero. What are the costs of this policy? Use the same approach as in 14-27, part 1.

2. Now assume that you used a “typical” standard costing system to judge performance. Suppose that the budget for 19_1 was based on the answer in 14-27, part 1. But on January 1 the purchasing agent chose the one-shot alternative. What variances and amounts would appear on his performance report? lop5