Wesco Incorporated's only product is a combination fertilizer$/$weedkiller called GrowNWeed. GrowNWeed is sold nationwide to retail

nurseries and garden stores.

Zwinger Nursery plans to sell a similar fertilizer$/$weedkiller compound through its regional nursery chain under its own private label.

Zwinger does not have manufacturing facilities of its own, so it has asked Wesco $($and several other companies$)$ to submit a bid for

manufacturing and delivering a $35,000-$pound order of the private brand compound to Zwinger. While the chemical composition of the

Zwinger compound differs from that of GrowNWeed, the manufacturing processes are very similar.

The Zwinger compound would be produced in $1,000-$pound lots. Each lot would require $39$ direct labor$-$hours and the following

chemicals:

The first three chemicals $($AG$-5,$ KL$-2,$ and CW$-7)$ are all used in the production of GrowNWeed. DF$-6$ was used in another compound

that Wesco discontinued several months ago. The supply of DF$-6$ that Wesco had on hand when the other compound was

discontinued was not discarded. Wesco could sell its supply of DF$-6$ at the prevailing market price less $$0\mathrm{.}08$ per pound selling and

handling expenses.

Wesco also has on hand a chemical called $BH-3,$ which was manufactured for use in another product that is no longer produced. $BH-3,$

which cannot be used in GrowNWeed, can be substituted for AG$-5$ on a one$-$for$-$one basis without affecting the quality of the Zwinger

compound. The BH$-3$ in inventory has a salvage value of $$520.$

Inventory and cost data for the chemicals that can be used to produce the Zwinger compound are shown below: