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1-41. Cost Data for Managerial Purposes Haverhill Electronics (HE) has offered to supply the county government with one model of its security screening device at
1-41. Cost Data for Managerial Purposes Haverhill Electronics (HE) has offered to supply the county government with one model of its security screening device at "cost plus 20 percent" HE operates a manufacturing plant that can produce 22,000 devices per year, but it normally produces 20,000 . The costs to produce 20,000 devices follow. Based on these data, company management expects to recerve $348(=$290120 percent) per device for those sold on this contract. After completing 200 devices, the company sent a bill (invoice) to the government for $69,600 ( =200 devices $348 per device) The president of the company received a call from a county auditor, who stated that the per device cost should be as follows. Therefore, the price per device should be $216($180120 percent). The county government ignored marketing costs because the contract bypassed the usual selling channels. Required Whit pnce would you recommend? Why? (Note: You need not limit younelf to the costs selected by the company or by the govemment auditor)
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