Question
Wildhorse Professionals, a management consulting firm, specializes in strategic planning for financial institutions. Daniel White and Mark Robinson, partners in the firm, are assembling
Wildhorse Professionals, a management consulting firm, specializes in strategic planning for financial institutions. Daniel White and Mark Robinson, partners in the firm, are assembling a new strategic planning model for clients to use. The model is designed to be used on most personal computers and replaces a rather lengthy manual model currently marketed by the firm. To market the new model, Daniel and Mark will need to provide clients with an estimate of the number of labour hours and the computer time needed to operate the model. The model is currently being test-marketed at five small financial institutions. These financial institutions are listed below. along with the number of combined computer/labour hours used by each institution to run the model once: Computer/Labour Hours Required Financial Institutions Canadian National 31.00 First Funds 56.00 Financial Federal 50.00 Pacific Coast 37.00 Lakeview Savings 37.00 Total 211.00 Average 42.20 Any company that purchases the new model will need to purchase user manuals to access and operate the system. Also required are specialized computer forms that are sold only by Wildhorse Professionals. User manuals will be sold to clients in cases of 24, at a cost of $402 per case. One manualmust be used each time the model is run because each manual includes a non-reusable computer password for operating the system. The specialized computer forms are sold in packages of 310 at a cost of $62 per package. One application of the model requires the use of 60 forms. This amount includes two forms that are generally wasted in each application due to printer alignment errors. The overall cost of the strategic planning model to user clients is $15,000. Most clients will use the model four times each year. Wildhorse Professionals must provide its clients with estimates of ongoing costs that are incurred in operating the new strategic planning model. They would like to provide this information in the form of standard costs. Any company that purchases the new model will need to purchase user manuals to access and operate the system. Also required are specialized computer forms that are sold only by Wildhorse Professionals. User manuals will be sold to clients in cases of 24, at a cost of $402 per case. One manual must be used each time the model is run because each manual includes a non-reusable computer password for operating the system. The specialized computer forms are sold in packages of 310 at a cost of $62 per package. One application of the model requires the use of 60 forms. This amount includes two forms that are generally wasted in each application due to printer alignment errors. The overall cost of the strategic planning model to user clients is $15,000. Most clients will use the model four times each year. Wildhorse Professionals must provide its clients with estimates of ongoing costs that are incurred in operating the new strategic planning model. They would like to provide this information in the form of standard costs. (d) Determine the standard materials cost associated with the user manuals and computer forms for each application of the strategic planning model. (Round answers to 2 decimal places, eg, 12.25) User manuals /application Computer forms $ /application Total cost $ /application
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