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Wesco Incorporsted's only product is a combination fertilizer$/$weedkiller called Grow NWeed. GrowNWeed is sold nationwide to retail Complete this question by entering your answers in the tabs below.

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Refer to the original data. Assume Zwinger Nursery plans to place regular orders for $22,000-$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 $60\%$

nurseries and garden stores.

Zwinger Nursery plans to sell a similar fertilizer$/$weedkiller compound through its regionsl nursery chain under its own private label.

Zwinger does not hove manufacturing facilities of its own, so it has asked Wesco $($and several other companies$)$ to submit a bid for

manufacturing and delivering $022,000-$pound order of the private brand compound to Zwinger. While the chemical composition of the

Zwinger compound differs from GrowiNWeed, the manufacturing processes are very similsr.

The Zvinger compound would be produced in $1,000-$pound lots. Each lot would require $39$ direct labor$-$hours and the following

chemicals:

The first three chemicals $($AG$-5,$ KL$-2,$ and CW$-7)$ are all used in the production of GrowNWeed. DF$-6$ was used in another compound

Wesco discontinued several months ago. The supply of DF$-6$ Wesco had on hand when the other compound was discontinued wos

not discarded. Wesco could sell its supply of DF$-6$ at the prevsiling market price less $$0\mathrm{.}10$ per pound selling and handling expenses.

Wesco also has on hand a chemical called $BH-3,$ which was manufactured for use in another product no longer produced. $BH*3,$ which

connot be used in GrowNWeed, can be substituted for $AG-5$ on o one$-$for$-$one bssis without offecting the quality of the Zwinger

compound. The $BH*3$ in inventory has a salvage value of $$470.$

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

The current direct labor wage rate is $$14$ per hour. The predetermined overhesd rate is based on direct labor$-$hours $($DLH$).$ For the

current year, bssed on a two$-$shift capacity with no overtime, the rate is as follows:

Variable manufacturing overhead

Fixed manufacturing overhead

Conbined predeternined overhead rate

Wesco's production manager says the present equipment and facilities are adequate to manufacture the Zwinger compound.

Therefore, the order would hove no effect on totsl fixed manufacturing overhead costs. However, Wesco is within $624$ hours of its two$-$

shift copscity this month. Any sdditional hours beyond the $624$ 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:

Wesco decided to submit a bid for the $22,000-$pound order of $Z$ winger's new compound. The order must be delivered by the end of

the current month. Zwinger noted this is a one$-$time order that will not be repested. Cslculate the lowest price Wesco could bid for

the order and still exactly cover its incremental manufacturing costs.

Refer to the original dato. Assume Zwinger Nursery plans to place regular orders for $22,000-$pound lots of the new compound.

Wesco expects the demand for GrowiNWeed to remsin strong. Therefore, the recurring orders from Zvinger would put Wesco over

its two$-$shift capscity. However, production could be scheduled so that $60\%$ of esch Zwinger order could be completed during

regular hours. As another option, some GrowNWeed production could be shifted temporarily to overtime so the Zwinger orders

could be produced on regular time. Current market prices are the best avsilable estimstes of future market prices.

Wesco's standard markup percentage for new products is $40\%$ of the full manufacturing cost, including fixed manufacturing

overhead. Calculate the price Wesco, Incorporated, would quote Zwinger Nursery for each $22,000-$pound lot using the standard

markup percentage.

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