Kathryn McCann recently started a job as an administrative assistant in the cost accounting department of Natick Manufacturing. New to the area of cost accounting, Kathryn is puzzled by the fact that one of Natick's manufactured products, SR$670,$ has a different cost depending on who asks for it$.$ When the marketing department requested the cost of SR$670$ in order to determine pricing for the new catalog. Kathryn was told to report one amount, but when a request came in the very next day from the financial reporting department for the cost of SR$670,$ she was told to report a very different cost. Kathryn runs a report using Natick's cost accounting system, which produces the following cost elements for one unit of SR$670$:

$($Click the icon to view the cost elements.$)$

Read the requirements.

Requirement $1.$ Explain to Kathry why the cost given to the marketing and financial reporting departments would be different.

Financial reporting is guided by when determining the cost of a product such as SR$670.$ Therefore

When making intemal decisions, for the new catalog. managers at Natick will include $[$

Kequirement $2.$ Cajculate the cost of one unit of Skb$/$U to determine $($a$)$ the seling pnce of SKb$/$U$,($b$)$ the cost of imventory tor tinancial reporting, and $($c$)$ whetiner to continue manufacturing SR$670$ or to purchase it from an outside source. $($If a box is not used in the table, leave the box empty; do not enter a zero.$)$

a$.$

Data table

Direct materials

Direct manufacturing labor

Variable manufacturing overhead

Allocated fixed manufacturing overhead

Research and development costs specific to SR$670$ a

Marketing costs ${?}^a$

Sales commissions ${?}^a$

Allocated administrative costs of corporate headquarters

Customer service costs ${?}^a$

Distribution costs ${?}^a$

$$,100\mathrm{.}00$

$62\mathrm{.}20$

$31\mathrm{.}50$

$133\mathrm{.}45$

$23\mathrm{.}20$

$22\mathrm{.}40$

$42\mathrm{.}50$

$70\mathrm{.}60$

$11\mathrm{.}40$

$30\mathrm{.}25$

aThese costs are specific to SR$670,$ but would not be eliminated if SR$670$ were purchased from an outside supplier. Allocated costs would be reallocated elsewhere in the company should the company cease production of SR$670.$