argely responsible for contract administration. The activity cost pools and their activity neasures are listed below: Activity Cost Pool Animation concept Animation production Contract administration Activity Measure Number of proposals Minutes of completed animation Number of contracts Activity Rate $6,400 per props $8,200 per minu $6,800 per cont These activity rates include all of the company's costs, except for its organization ustaining costs and idle capacity costs. There are no direct labor or direct materials osts Preliminary analysis using these activity rates has indicated that the local commercial egment of the market may be unprofitable. This segment is highly competitive. Producers of local commercials may ask three or four companies like Pixel Studio to bid, which results in an unusually low ratio of accepted contracts to bids. Furthermore, the nimation sequences tend to be much shorter for local commercials than for other work. Since animation work is billed at fairly standard rates according to the running time of he completed animation, this means that the revenues from these short projects tend to le below average. Data concerning activity in the local commercial market appear elow: Activity Measure Number of proposals Minutes of completed animation Number of contracts Local Commercials 17 8 9 "he total sales from the 9 contracts for local commercials was $340,000. tequired: Calculate the cost of serving the local commercial market. Calculate the margin earned serving the local commercial market. (Remember, this ompany has no direct materials or direct labor costs) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the cost of serving the local commercial market. Cost of serving Required 2 > Check my work Contract administration Number of contracts 55,800 per con These activity rates include all of the company's costs, except for its organization sustaining costs and idle capacity costs. There are no direct labor or direct materials costs. Preliminary analysis using these activity rates has indicated that the local commercial segment of the market may be unprofitable. This segment is highly competitive. Producers of local commercials may ask three or four companies like Pixel Studio to bid, which results in an unusually low ratio of accepted contracts to bids. Furthermore, the animation sequences tend to be much shorter for local commercials than for other work. Since animation work is billed at fairly standard rates according to the running time of the completed animation, this means that the revenues from these short projects tend to be below average. Data concerning activity in the local commercial market appear below: Activity Measure Number of proposals Minutes of completed animation Number of contracts Local Commercials 17 8 9 The total sales from the 9 contracts for local commercials was $340,000 Required: 1. Calculate the cost of serving the local commercial market 2. Calculate the margin earned serving the local commercial market. (Remember, this company has no direct materials or direct labor costs.) Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the margin earned serving the local commercial market. (Remember, this compan labor costs.) Profitability Analysis Costs
