Grip 6, is an emerging company that manufactures and sells belts. Ghary is the only employee of Grip 6 and his sole role is to make the belts. The belts include two parts: the belt buckle, and the belt strap. To make a belt, the buckle is machined from metal, and then the belt strap is cut to length out of webbing. A completed belt is packaged in single-belt box (i.e. the Packaging Boxes are part of the manufacturing costs). The belts are made in a warehouse that includes the necessary equipment to machine the belt buckles and cut the belt strap for $15,500 per year. That rent includes the utilities and use of the equipment. The warehouse will also store any materials for no additional charge. Ghary did one production run in 2015. The Ending Balance of inventory at the end of the run was as follows: Item Ending Amount Ending Balance ($) Metal 200 oz. $50 Webbing 400 ft $800 Packaging Boxes 500 $250 Belts in Process 150 $2,250 Finished Belts (in boxes) 50 $1,250 In 2016, Ghary worked diligently to produce 3,050 additional belts and sold 2,500 belts. The revenue from the sales was $87,500. During 2016, Grip 6 incurred the following expenses: Item Expense ($) Wages to Ghary for Production $45,000 Rent for the Warehouse $15,500 Metal $7,775 Webbing $12,200 Packaging Boxes $1,375 Other General and Administrative Expenses $2500 Delivery Expenses (Shipping) $1000 Advertising Expenses $1000 The ending balance at the end of 2016 was as follows: Ending Amount Ending Balance ($) Item Metal 800 oz. $200 Webbing 400 ft $800 Packaging 200 $100 Belts in Process 150 $3,750 Finished Belts (in boxes) 600 $15,678 Please answer the following questions ignoring taxes and assuming that Grip 6 uses Full Absorption costing unless specified otherwise: The production manager has agreed to take on the job for a fixed salary of $45,000 a year plus a bonus if the variable cost of goods manufactured per unit decreases by $1.00 compared with the cost of goods manufactured per unit in 2016. Assuming the cost per oz of metal, the cost per foot of webbing, the cost per box, and the rent remain the same, will the new production manager earn a bonus if she produces 3,250 belts? Yes No What would happen to the COGM if Ghary were to strike a deal with the landlord to reduce the cost of the warehouse rent by $2000. (Note: assume all other costs and production levels are unchanged) Total COGM would increase by $2000. Total COGM would decrease by $2000. Total COGM would increase by $1639 (which is $2000 * 2,500 sold / 3,050 produced) Total COGM would decrease by $1639 (which is $2000 *2,500 sold / 3,050 produced)