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Strategic initiatives and CSR Quicksaw Inc. is a production company that is in...

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Accounting

Strategic initiatives and CSR
Quicksaw Inc. is a production company that is in the process of testing a strategic initiative aimed at increasing gross profit. The companys current sales revenue is $1,200,000. Currently, the companys gross profit is 35% of sales, but the companys target gross profit percentage is 40%. The companys current monthly cost of production is $780,000. Of this cost, 50% is for labor, 30% is for materials, and 20% 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:
1. 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.

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