Alameda Instruments (Al) has offered to supply the Air Force with computer monitors at "cost plus 20 peroent" Al operates a manufacturing plant that can produce 22,000 monitors per year, but it normally percen produces 20,000. The costs to produce 20,000 monitors follow: Cost per Monitor Total Cost Production costs: Materials Labor Supplies and other costs that will vary with production Indirect cost that will not vary with production $1.180,000 59 84 42 28 89 60 1,680,000 840,000 560,000 1,780,000 1,200,000 Variable marketing costs Administrative costs (all fixed) Totals $7,240,000 $362 Based on these data, oompany management expects to receive S434.4 (= S382 120 percent) per monitor for those sold on this contract. After completing 2,000 monitors, the company sent a bill (invoioe) to the government for S868, 800 (= 2.000 monitors $434.4 per monitor). The president of the company received a call from an Air Foroe auditor, who stated that the per monitor cost should be Materials Labor Supplies and other costs that will vary with production S 59 84 42 s 185