Winner's Circle, Inc., manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 3,300 medals each month. Current monthly production is 2,475 medals. The company normally charges $500 per medal. Variable costs and fixed costs for the current activity level of 75 percent of capacity are as follows: Production Costs Variable costs: Manufacturing: Direct labor 544, 500 Direct material 136, 125 Marketing 185, 625 Total variable costs $ 866, 250 Fixed costs: Manufacturing $ 208,950 Marketing 112, 800 Total fixed costs $ 321, 750 Total costs $1, 188, 000 Variable cost per unit $ 350 Fixed cost per unit 130 Average unit cost 480Winner's Circle hasjust received a special onetime order for 825 medals at $335 per medal. For this particular order, no variable marketing costs will be incurred. Cathy Donato, a management accountant with Winner's Circle, has been assigned the task of analyzing this order and recommending whether the company should accept or reject it After examining the costs, Donato suggested to her supervisor, Gerard LePenn, who is the controller, that they request competitive bids from vendors for the raw material as the current quote seems high. LePenn insisted that the prices are in line with other vendors and told her that she was not to discuss her observations with anyone else. Donato later discovered that LePenn is a brother-inlaw of the owner of the current rawmaterial supply vendor. Required: 1. Which of the following costs will be relevant to Cathy Donato's analysis of the special order being considered by Winner's Circle, Inc]? {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} I] Fixed marketing cost. I] Variable costs of labor and material. I] Fixed manufacturing costs. .. ............................................. . I] Variable marketing cost. .............................................. o- Compute both the newI average unit cost and the incremental unit cost for the special order. [Do not round intermediate calculations. Round your answers to 2 decimal places.) New average unit cost Incremental unit cost 3. Identify the considerations that Donato should include in her analysis of the special order. {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.} I] The future customer potential ofthe buyer of the special order, generating additional revenues. El Acceptance of the special order could result in higher bonuses for the department's staff. .. ................................................................................................................................................ . El Possible problems with other customers who pressure the company for similar treatment. 4. Which of the following statements are true regarding Donato's possible response to the ethical conict arising out of the controller's insistence that the company avoid competitive bidding? (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 boat 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.} I] She should never go to the nexthigher managerial level as this would mean bypassing of levels of authority and create further damage to her relations with the manager. [I Ethical conicts are a part of everyday o'ice life and is no cause for resigning. I] She should follow the company's established policies on such matters. I] The ethical requirement of competence would imply that Donato should try and resolve the conflict herselfinstead of discussing with other advisors. I] If the ethical conict still exists after exhausting all avenues of internal review, she may have to resign from the company and submit an informative memorandum to the board of directors. 5 I] Donato should clarify relevant concepts by condential discussions with an objective advisorto obtain an understanding of possible ' courses of action. '0 .............................................................................................................................................................................................................................. a