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Quicksaw Inc. is a production company that is in the process of testing a strategic initiative aimed at increasing gross profit. The company's current sales revenue is The company's actual direct materials cost is $$446,400$ 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.

Cost makeup of Procedure $1$:

Cost makeup of Procedure $2$:

The company is planning a CSR initiative to reuse some of the indirect materials used in production during Procedure $2.$ These indirect materials normally makeup

$50\%$ of the overhead cost for Procedure $2,$ but the CSR initiative would reduce the usage of indirect materials. Determine what the maximum new cost of these indirect

materials could be for Procedure $2$ if this CSR initiative is expected to enable the company to meet its target gross profit percentage $($holding all other costs constant$).$

Maximum new cost of P$2$ overhead materials: $

$$2,400,000.$ Currently, the company's gross profit is $35\%$ of sales, but the company's target gross profit percentage is $40\%.$ The company's current monthly cost of

production is $$1,560,000.$ Of this cost, $40\%$ is for labor, $30\%$ is for materials, and $30\%$ is for overhead.

The strategic initiative being tested at Quicksaw is a redesign of its production process that splits the process into two sequential procedures. The makeup of the costs

of production for Procedure $1$ is currently $50\%$ direct labor, $45\%$ direct materials, and $5\%$ overhead. The makeup of the costs of production for Procedure $2$ is currently

$55\%$ direct labor, $25\%$ direct materials, and $20\%$ overhead. Company management estimates that Procedure $1$ costs twice as much as Procedure $2.$

Required:

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 gross profit at the

current level of sales.

Cost makeup of Procedure $1$:

Cost makeup of Procedure $2$:

Direct Labor $

Direct Materials

Overhead

Total

The company's actual direct materials cost is $$446,400$ 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.

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