Use the following to answer questions 1-2:

In addition to the 3D Printers, Jeffs also manufactures cameras and has two support departments: sales and administration. The table below presents a breakdown of how the service departments work is distributed to the manufacturing departments. Sales departments OH is allocated by sales visits made and administration by the number of employees in each department.

	Sales	Administration
Total Costs	$400,000	$500,000
Driver:
Sales	N/A	5
Administration	0	N/A
3D Printers	1,500	400
Cameras	500	95
Total Drivers	2,000	500

(20 points). Assuming that Jeffs uses the Sequential method and allocates the Administration costs first, how much of the service OH should be allocated to the 3D Printer line? Use the sequential method here. Remember that a percentage of the Administration budgeted costs will go into sales.

(10 points). How much of the service overhead should be allocated to each new 3D Printer (use the number of units transferred to finished goods from the Production Reports this will be 80,000)?

Use the following to answer questions 15-16:

Now that you have calculated all of the necessary cost information, Jeffs management team is anxious for you to help them set a sales price for their printer. Because of their reputation of being a high quality manufacturer of 3D Printers, the managers believe that they can make a killing with this new printer. The managers want to charge $750 for the printer because the printers are high quality, with the newest technology and it is a highly anticipated item. However, the customary markup for similar printers is only 50%. And, the market is getting more saturated every time a new printer is introduced.

(15 points). The per unit cost from the Production reports is $296.07. Assuming that Jeffs desired ROI is 45% (tech companies have a much higher ROI than most companies) and that they have $35,000,000 invested in the line (machinery, working capital, etc.), how much should Jeffs charge for each 3D Printer using the Cost-Plus model? Assume the demand for the 3D Printers is good, but the market is getting more saturated with each new model that comes out. With proper pricing, all units will sell that are produced this period. See equation on pg 5.

(15 points). Do you think $750 should be the price for the printers? If not, what price would you suggest? Defend your answer.

Cost-Plus Pricing Equation

Required ROI * Initial Investment) + S & A Expenses

Unit Sales * Unit Production Cost