Omana Syntheic Fbers inc specializes n the manufacture of suntheic fibers thek the y use in many prodlucts such as blankeits, coats, and unitorms for golice and tnelfigh empay has been in busihess for 20 years and has been proftuibie each of the gus: 15 yeas, Omaha Snthesic Fbers uses a standard-costing sistem and agplies ovwehead on the bass d deed-abur hours Management has recenty neceved a equest to bid on the manufacture ofl 80e 000 sonsals scheduied tor delivery to several miltary bases. The bit must be statet at tull cast gee itus a retum on tull aost of no more than 15 percent belbre ncome tnes. Fual cost huas b deltst as The contractor has indicsted that bds in excess of S.5 ger dlanket are not kely to be carsicest In order to precare the bic for the 800 000 blankets, Andrea Lighther diector ol cost managememt has gathered the tolowing information about the cests assocaled wilth the groduacton or the beis Direct material Dinect labor Direct machine costs S 7.00 per hour $100t per bianke S 300 er direcyabor hour Fxed overhead Incremental administrative cosis Special fee Maberial usage Production rate S2 500 ger 1000 dankeis pounds ger Sankel Direct machine coss consist of hems such as special lubricants regpiacement of needles ussd sitching, and maintenance costs These costs are not inoludied in the momai overheac as tanaha Syntete Fters recenty developed a new biarket iber at a cost of $750000 ln an att recover this cost managerment has instituted a policy of adding a $0 50 lee to the cest of each bans using the new Siber. To dale, the company has recovered $125 000 Lightner knows that this the dos not St within the delintion of full cost as it is mot a cost of manufacturing the petuct Required t. Calcuiate the minimum price per bilanket that Omaha Synthetic Fithers Inc could be without reducing the company's net income. 2. Using the full cost oriternia and the maxinum alowable retum specilfied calcuiabe Omaha Synthets Fibers Inc. 's bid price per bianket 3. Asssume that the price per bianket that Omaha Synthetic Fibers hc calculabnd using the cosboius criteria specifed sgreater arn the maximum bnd of S25 per tarnet alowed Select the tacties hat management should consider before deciding whether to submt a bid at the mavinum acceptable price of $25 per blanket Award 1700 points Omaha Synthetic Fibers Inc specializes in the manufacture of synthetic fibers that the company uses in many products such as blankets, coats, and uniforms for police and firefighters. The company has been in business for 20 years and has been profitable each of the past 15 years. Omaha Synthetic Fibers uses a standard-costing system and applies overhead on the basis of direct-labor hours Management has recently received a request to bid on the manufacture of 800,000 blankets scheduled for delivery to several miltary bases. The bid must be stated at full cost per unit plus a retum on full cost of no more than 15 percent before income taxes. Full cost has been defined as including all variable costs of manufacturing the product, a reasonable amount of fxed overhesd, and reasonable incremental administrative costs associated with the manufacture and sale of the product The contractor has indicated that bids in excess of $25 per blanket are not lkely to be considened in order to prepare the bid for the 800,000 blankets, Andrea Lightner, director of cost management has gathered the following information about the costs associated with the production of the blankets $ 1.50 per pound of fibers $ 7.00 per hour $10.00 per blanket $ 3.00 per direct-iabor hour $ 8.00 per direct-labor hour $2,500 per 1,000 blankets $ 0.50 per blanket Direct material Direct labor Orect machine costs Variable overhead Fixed overhead Incremental administrative costs Special fee Material usage Production rate 6 pounds per blanke 4 blankets per direct-Habor hour Direct machine costs consist of items such as special lubricants, replacement of needles used in stitching, and maintenance costs. These costs are not indluded in the normal overhead rates Omaha Syrthetic Fibers recently developed a new blanket fiber at a cost of $750,000 In an effort to recover this cost, management has instituted a policy of adding a $0.50 fee to the cost of each blanke using the new fiber. To date, the company has recovered $125,000. Lightner knows that this fee does not fit within the definition of full cost as it is not a cost of manufacturing the product Required 1. Calculate the minimum price per blanket that Omaha Synthetic Fibers Inc could bid without reducing the company's net income 2 Using the full cost criteria and the maximum alowable returm specifed, calculate Omaha Synthetie 3. Assume that the price per blanket that Omaha Symtheic Fibers Inc calculated using the cost-plus Fibers Inc.'s bid price per blanket criteria specified is greater than the maximum bid of $25 per blanket allowed. Select the factors that management should consider before deciding whether to submit a bid at the maximum acceptable price of $25 per blanket