Required information [The following information applies to the questions displayed below.] North American Pharmaceuticals, Inc. specializes in packaging bulk drugs in standard dosages for local hospitals. The company has been in business for seven years and has been profitable since its second year of operation. Don Greenway, Assistant Controller, installed a standard costing system after joining the company three years ago. Wyant Memorial Hospital has asked North American Pharmaceuticals to bid on the packaging of one million doses of medication at total cost plus a return on total cost of no more than 15 percent. Wyant defines total cost as including all variable costs of performing the service, a reasonable amount of fixed overhead, and reasonable administrative costs. The hospital will supply all packaging materials and ingredients. Wyant has indicated that any bid over $0.015 per dose will be rejected. Greenway has accumulated the following information prior to the preparation of the bid. Direct labor Variable overhead 8.00 per direct-labor hour (DLH) 6.00 per DLH $10.00 per DLH $1,000 for the order 2,000 doses per DLH Fixed overhead Incremental administrative costs Production rate 3. Suppose that the price per dose that North American Pharmaceuticals, Inc. calculated using the cost-plus criterion specified by Wyant Memorial Hospital is greater than the maximum bid of $0.015 per dose allowed by Wyant. Select the factors that the pharmaceutical company's management should consider before deciding whether or not to submit a bid at the maximum price of $0.015 per dose that Wyant allows. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) 3. Suppose that the price per dose that North American Pharmaceuticals, Inc. calculated using the cost-plus criterion specified by Wyant Memorial Hospital is greater than the maximum bid of $0.015 per dose allowed by Wyant. Select the factors that the pharmaceutical company's management should consider before deciding whether or not to submit a bid at the maximum price of $0.015 per dose that Wyant allows. (You may select more than one answer. Single click the box with the question mark to produce answer. Any boxes left with a question mark will be automatically graded as incorrect.) check mark for a correct answer and double click the box with the question mark to empty the box for a wrong |? Whether the maximum bid of $0.015 contributes toward covering fixed costs. | ? Whether there are available jobs on which earnings might be greater. ?Whether North American has excess capacity
