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 $$570.$

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

Raw Material Pounds in Inventory Actual Price per Pound When Purchased Current Market Price per Pound

AG$-520,000$ $ $0\mathrm{.}76$ $ $0\mathrm{.}86$

KL$-24,800$ $ $0\mathrm{.}44$ $ $0\mathrm{.}49$

CW$-78,300$ $ $1\mathrm{.}39$ $ $1\mathrm{.}59$

DF$-67,660$ $ $0\mathrm{.}58$ $ $0\mathrm{.}54$

BH$-35,800$ $ $0\mathrm{.}64($Salvage$)$

The current direct labor wage rate is $$14$ per hour. The predetermined overhead rate is based on direct labor$-$hours $($DLH$).$ The predetermined overhead rate for the current year, based on a two$-$shift capacity with no overtime, is as follows:

Variable manufacturing overhead $ $5\mathrm{.}30$ per DLH

Fixed manufacturing overhead $7\mathrm{.}90$ per DLH

Combined predetermined overhead rate $ $13\mathrm{.}20$ per DLH

Wesco$$s production manager reports that the present equipment and facilities are adequate to manufacture the Zwinger compound. Therefore, the order would have no effect on total fixed manufacturing overhead costs. However, Wesco is within $120$ hours of its two$-$shift capacity this month. Any additional hours beyond the $120$ hours must be done in overtime. If need be$,$ the Zwinger compound could be produced on regular time by shifting a portion of GrowNWeed production to overtime. Wesco$$s direct labor wage rate for overtime is $$21$ per hour. There is no allowance for any overtime premium in the predetermined overhead rate.

Required:

$1.$ Wesco has decided to submit a bid for the $32,000$ pound order of Zwinger$$s new compound. The order must be delivered by the end of the current month. Zwinger has indicated that this is a one$-$time order that will not be repeated. Calculate the lowest price that Wesco could bid for the order and still exactly cover its incremental manufacturing costs.

$2.$ Refer to the original data. Assume that Zwinger Nursery plans to place regular orders for $32,000-$pound lots of the new compound. Wesco expects the demand for GrowNWeed to remain strong. Therefore, the recurring orders from Zwinger would put Wesco over its two$-$shift capacity. However, production could be scheduled so that $60\%$ of each Zwinger order could be completed during regular hours. As another option, some GrowNWeed production could be shifted temporarily to overtime so that the Zwinger orders could be produced on regular time. Current market prices are the best available estimates of future market prices.

Wesco$$s standard markup policy for new products is $40\%$ of the full manufacturing cost, including fixed manufacturing overhead. Calculate the price that Wesco, Incorporated, would quote Zwinger Nursery for each $32,000$ pound lot of the new compound, assuming that it is to be treated as a new product and this pricing policy is followed.