Metro Interior Designs has been requested to prepare a bid to decorate four model homes for a new development. Winning the bid would be a big boost for sales representative Jeff Draper, who works entirely on commission. Sally Gregory, the cost accountant for Metro, prepares the bid based on the following cost information: (Click the icon to view the cost information.) (Click the icon to view the additional information.) Read the requirements. Data Table Direct costs Design costs $ 21,000 Furniture and artwork 69,000 Direct labor Delivery and installation 13,000 27,000 Overhead costs Design software 5,400 Furniture handling 5,300 6,300 General and administration Total overhead costs 17,000 $ 147,000 Full product costs More Info Based on the company policy of pricing at 140% of full cost, Gregory gives Doogan a figure of $205,800 to submit for the job. Draper is very concerned. He tells Gregory that at that price, Metro has no chance of winning the job. He confides in her that he spent $750 of company funds to take the developer to a basketball playoff game where the developer disclosed that a bid of $196,000 would win the job. He hadn't planned to tell Gregory because he was confident that the bid she developed would be below that amount. Draper reasons that the $750 he spent will be wasted if Metro doesn't capitalize on this valuable information. In any case, the company will still make money if it wins the bid at $196,000 because it is higher than the full cost of $147,000. Requirements 1. 2. Is the $750 spent on the basketball tickets relevant to the bid decision? Why or why not? Gregory suggests that if Draper is willing to use cheaper furniture and artwork, he can achieve a bid of $196,000. The designs have already been reviewed and accepted and cannot be changed without additional cost, so the entire amount of reduction in cost will need to come from furniture and artwork. What is the target cost of furniture and artwork that will allow Draper to submit a bid of $196,000 assuming a target markup of 40% of full cost? Evaluate whether Gregory's suggestion to Draper to use the developer's tip is unethical. Would it be unethical for Draper to reduce the cost of furniture and artwork to arrive at a lower bid? What steps should Draper and Gregory take to resolve this situation? 3