Question 3 (10 Marks) Glass Creations designs, manufactures, and sells modern glass sculptures. Sabrina Jenkinson is an artist for the company. Jenkinson has spent much of the past month working on the design of an intricate abstract piece. Jimmy Smith, product development manager, likes the design. However, he wants to make sure that the sculpture can be priced competitively. Alex Nebraska, Glass's cost accountant, presents Smith with the following cost data for the expected production of 100 sculptures: $15,000 Design cost $54,000 Direct materials $ 33,000 Direct manufacturing labour $ 40,000 Variable manufacturing overhead $38,000 Fixed manufacturing overhead Marketing $ 26,000 Consider each of the following four situations independently Required: a. Smith thinks that Glass Creations can successfully market each piece for $2,550. The company's target operating income is 20% of revenue. Calculate the target full cost of producing the 100 sculptures. Does the cost estimate Nebraska developed meet Glass's requirements? Show all relevant calculations. (3 marks) b. Smith discovers that Jenkinson has designed the sculpture using the highest grade glass available, rather than the standard grade of glass that Glass Creations normally uses. Replacing the grade of glass will lower the cost of direct materials by 45%. However, the redesign will require an additional $2,700 of design cost, and the sculptures will be sold for $2,300 each. The company's target operating income is 20% of revenue. Willl this design change allow the sculpture to meet its target cost? Show all relevant calculations. (3 marks) c. Jenkinson insists that the higher grade glass is a necessity in terms of the sculpture's design. She believes that spending an additional $27,000 on better marketing will allow Glass Creations to sell each sculpture for $3,000. The company's target operating income is 20% of revenue. If this is the case, will the sculptures' target cost be achieved without any value engineering? Show all relevant calculations. (3 marks) d. Compare the total operating income on the 100 sculptures for requirements b. and c. What do you recommend Glass Creations do, based solely on your calculations? Explain briefly (1 mark)