1-41 (Static) Cost Data for Managerial Purposes (LO 1-3) 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. es Production costs: Materials Labor Supplies and other costs that will vary with production Indirect cost that will not vary with production Variable marketing costs Administrative costs (will not vary with production) Totals Total Cost Cost per Device $ 1,000,000 2,000,000 $ 50 100 600,000 30 600,000 30 400,000 1,200,000 20 60 $ 5,800,000 $ 290 Based on these data, company management expects to receive $348 (= $290 x 120 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. Materials Labor Supplies and other costs that will vary with production $ 50 100 30 $ 180 Therefore, the price per device should be $216 (= $180 x 120 percent). The county government ignored marketing costs because the contract bypassed the usual selling channels. Required: For each of the four situations, calculate the cost basis per device based on the information shown above. (Round Intermediate calculations and final answers to 2 decimal places.) Required: For each of the four situations, calculate the cost basis per device based on the information shown above. (Round intermediate calculations and final answers to 2 decimal places.) Options: A. Only the differential production costs could be considered as the cost basis. B. The total cost per device for normal production of 20,000 devices could be used as the cost basis. C. The total cost per device for production of 22,000 devices, excluding marketing costs, could be used as the cost basis. D. The total cost per device for production of 22,000 devices, including marketing costs, could be used as the cost basis. Per Device Cost Basis Recommended Price per Device Option A $ 180.00 Option B $ 290.00 Option C Option D