1. Software Solution (SOS) helps subscribers solve software problems. All transactions are made over the telephone. For the year 2018, 10 engineers, most of whom are recent graduates, handled 119,000 calls. The average yearly salary for software engineers was $58,000. Starting in 2019, the firm retained and hired only software engineers with at least 2 years of experience. SOS raised the engineers' salary to $73,000 per year. In 2019, eight engineers handled 127,000 calls.

Required:

1.Calculate the partial operational productivity ratio for both years.

2. Calculate the partial financial productivity ratio for both years.(Round your answers to 4 decimal places.)

2018 2019

1.Operational partial productivity ______________ _____________

2.Financial partial productivity ______________ _____________

2. The market price for a product has been $61 per unit, but competitive pressures have reduced the market price to $57. The firm manufactures 15,000 of these products per year at a manufacturing cost of $45 per unit (including $24 fixed cost and $21 variable cost per unit). Other selling and administrative costs for the product are $2 per unit.

The firm ignores competitive prices because it has a differentiated product. It uses full manufacturing cost-based pricing with a 38% markup. What is the firm's price?(Round your answer to 2 decimal places.)

Firm's price ____________ per unit.

3. VIP-MD is a health maintenance organization (HMO) located in North Carolina. Unlike the traditional fee-for-service model that determines the payment according to the actual services used or costs incurred, VIP-MD receives a fixed, prepaid amount from subscribers. The per member, per monthrate (PMPM) is determined by estimating the health care cost per enrollee within a geographic location. The average health care coverage in North Carolina costs $367 per month, which is the same amount irrespective of the subscriber's age. Because individuals are demanding quality care at reasonable rates, VIP-MD must contain its costs to remain competitive. A major competitor, National Physicians, entered the North Carolina market early in the current year with a monthly premium of $324. VIP-MD wants to maintain its current market penetration and hopes to increase its enrollees in the current year. The latest data on the number of enrollees and the associated costs follow:

Age Enrollment in Projected Enrollment Average Monthly Cost in

Current year Next Year Current Year

1-4 45,588 48,877 $11,147,772

5-14 82,356 84,563 10,059,532

15-19 95,773 95,787 8,436,724

20-24 66,146 67,782 9,539,324

25-34 133,396 132,454 26,432,108

35-44 166,776 175,346 38,882,008

45-54 85,396 90,789 22,741,836

55-64 99,124 101,823 28,691,612

65-74 156,188 161,459 49,518,044

75-84 67,795 72,365 33,432,660

85 years and older23,399 26,749 24,286,375

1,021,937 1,057,994 $263,167,995

Required:

1. Calculate the target cost required for VIP-MD to maintain its current market share and profit per enrollee in the current year.

2. Costs in the health care industry applicable to VIP-MD and National Physicians are expected to increase by 8% in the coming year. VIP-MD is planning for the year ahead and is expecting all providers, including VIP-MD and National Physicians, to increase their rates by $25 to $349. Calculate the new target cost assuming again that VIP-MD wants to maintain the same profit per enrollee as in the current year.

(For all requirements, do not round intermediate calculations and round your answers to 2 decimal places.)

1 Required target cost ______________

2 New target cost _______________

4 Mom's Apple Pie Company uses a standard cost system. The standard direct labor time for each pie is 10 minutes. During the most recent month, the company produced and sold 6,000 pies. The standard direct labor rate is $11.90 per hour; the actual labor rate per hour for the month was $11.70. The company used a total of 1,050 labor hours.

What was the direct labor efficiency variance for the month? Was this variance favorable (F) or unfavorable (U)?(Do not round intermediate calculations.)

Direct labor efficiency (usage) variance ______________ ______________

5 C. W. McCall sells a goldplated souvenir mug; McCall expects to sell 2,100 units for $35 each to earn a $15 contribution margin per unit. Janice McCall, president, expects the year's total market to be 30,000 units. For the year just completed, the local college won the national hockey championship, and as a result, the total actual market was 125,000 units. C. W. McCall sold 6,250 units and calculates sales variances using contribution margin.

What is the firm's market size variance?

Market size variance ____________________ ________________