Strategic Initiatives and CSR Blue Skies Inc. is a retail gardening company that is piloting a new strategic initiative aimed at increasing gross profit. Currently, the company's gross profit is 21% of sales, and its target gross profit percentage is 26%. The company's current monthly sales revenue is $540,000. The new initiative being piloted is to produce goods in-house instead of buying them from wholesale suppliers. Its in-house production process has two procedures. The makeup of the costs of production for Procedure 1 is 40% direct labor, 45% direct materials, and 15% overhead. The makeup of the costs of production for Procedure 2 is 50% direct labor, 25% direct materials, and 25% overhead. Assume that Procedure 1 costs twice as much as Procedure 2 . 1. Determine what the cost of labor, materials, and overhead for both Procedures 1 and 2 would need to be for the company to meet its target 2. The company's actual labor cost is $108,000 for Procedure 1 . Determine the actual cost of direct labor, direct materials, and overhead for each procedure, and the total cost of production for each procedure. 3. The company is planning a CSR initiative to recycle the indirect materials used in production during Procedure 1 . The company is paid for any of the indirect materials it recycles, and it applies the income from these payments as a direct offset to the cost of the direct materials. These indirect materials normally makeup 90% of the overhead cost for Procedure 1 . Determine what the maximum new cost (net of recycling revenues) of these indirect materials could be for Procedure 1 if this CSR initiative were to enable the company to meet its target gross profit percentage without changing any other costs. Maximum new cost of P1 overhead materials: 9