Question 3 (20 Marks) Anchor Homes Ltd manufactures modular homes. The company has two main products that it sells commercially: a 1,000 square foot, one-bedroom model and a 1,500 square foot, two- bedroom model. The company recently began providing emergency housing (huts) to Emergency Management Australia (EMA). The emergency housing is similar to the 1,000 square foot model. EMA has requested Anchor Homes Ltd to create a bid for 150 emergency huts to be sent for flood victims in the east. Your boss has asked that you prepare this bid. In preparing the bid, you find a recent invoice to EMA for 200 huts provided after tropical cyclone Debbie. You also have a standard cost sheet for the 1,000 square foot model sold commercially. Both are provided as follows: Standard cost sheet: 1,000 sq. ft. one-bedroom model Direct materials Direct manufacturing labour (30 hours) Manufacturing overhead* ($3 per direct labour dollar) Total cost Retail markup on total cost Retail price $8,000 600 1,800 $10,400 20% $12,480 *Overhead cost pool includes inspection labour ($15 per hour), setup labour ($12 per hour), and other indirect costs associated with production. INVOICE: DATE: September 15, 2017 BILL TO: EMA FOR: 200 Emergency Huts SHIP TO: Townsville, Queensland Direct materials Direct manufacturing labour ** Manufacturing overhead Total cost Government contract markup on total cost Total due $1,840,000 138,400 415,200 2,393,600 15% $2,752,640 **Direct manufacturing labour includes 28 production hours per unit, 4 inspection hours per unit, and 6 setup hours per unit Required: 1. Calculate the total bid if you base your calculations on the standard cost sheet assuming a cost plus 15% government contract. 2. Calculate the total bid if you base your calculations on the September 15, 2017, invoice assuming a cost plus 15% government contract. 3. What are the main discrepancies between the bids you calculated in #1 and #2? 4. What bid should you present to your boss? What principles from the CIMA's Code of Ethics should guide your decision