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Problem 1 - 4 1 ( Algo ) Cost Data for Managerial Purposes ( LO 1 - 3 ) Haverhill Electronics ( HE ) has
Problem Algo Cost Data for Managerial Purposes LO
Haverhill Electronics HE has offered to supply the county government with one model of its security screening device at "cost plus
percent." HE operates a manufacturing plant that can produce devices per year, but it normally produces The costs to
produce devices follow.
Based on these data, company management expects to receive $$ percent per device for those sold on this
contract. After completing devices, the company sent a bill invoice to the government for $ devices
$ per device
The president of the company received a call from a county auditor, who stated that the per device cost should be as follows.
Therefore, the price per device should be $$ percent The county government ignored marketing costs
because the contract bypassed the usual selling channels. Required:
For each of the four situations, calculate the cost basis per device based on the information shown above.
Note: Round intermediate calculations and final answers to decimal places.
Options:
A Only the differential production costs could be considered as the cost basis.
B The total cost per device for normal production of devices could be used as the cost basis.
C The total cost per device for production of devices, excluding marketing costs, could be used as the cost basis.
D The total cost per device for production of devices, including marketing costs, could be used as the cost basis.
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