A) Assuming that Brisies has no inventory at the beginning of the period, what would be the COGM/u for the quarter if the company produces and sells 500 shields?

575

640

705

735

B) Assuming that Brisies has no inventory at the beginning of the period, what would be Brisies's profit for the quarter if she produced and sold 500 shields? (please use "-" for a loss, and only type the number e.g. -15000).

C) Assuming that Brisies has no inventory at the beginning of the period, what would be Brisies's COGM/u for the quarter if she produced 1,000 shields, but still sold 500 shields?

575

640

705

735

D) Assuming that Brisies has no inventory at the beginning of the period, what would be Brisies's profit for the quarter if she produced 1,000 shields, but still sold 500 shields? (please use "-" for a loss, and only type the number e.g. -15000)

E) What does the bonus structure encourage Brisies to do?

Produce more units

Produce fewer units

F) If Brisies were to produce 1,000 units, but still sell 500 units and the bonus structure was based on profits under a variable costing system, she would earn the bonus?

True

False

G) What is the primary reason for the difference in Net income between producing 500 units and producing 1,000 units holding constant sales at 500 units.

What? I thought they were the same!

The commissions that must be paid.

The NPV of the project.

Less fixed overhead is recognized as an expense when production is 1,000 units.

H) Based on your analysis above, how would you adjust the contract with Brisies?

Myrmidon Corp. provides shields for barbaric security services. Brisies, the manager of a division of Myrmidon Corp. recently received a call from senior management that there is an incentive promotion that will pay a bonus of 10% of before-tax profits in the second quarter of 2021. Myrmidon Corp. uses full absorption, actual costing to determine the before-tax income. Her estimated costs are as follows: Fixed Costs for a Quarter Management salaries not associated with production $50,000 Rent of the manufacturing plant $50,000 Utility charges for the manufacturing plant $15,000 Variable Costs Sales Commissions Maintenance on manufacturing plant Direct Materials Direct Labor Rates $30/shield sold $50/shield $400/shield $125/shield Brisies anticipates selling 500 shields in the second quarter of 2021 at a unit price of $800/shield. *Do not consider the "bonus" as part of the costs in your analysis