Agmar Professionals, a management consulting firm, specializes in strategic planning for financial institutions. Tim Agler and Padmasree Marlin, partners in the firm, are assembling a new strategic planning model for clients to use. The model is designed to be used on most personal computers and replaces a rather lengthy manual model currently marketed by the firm. To market the new model, Tim and Padmasree will need to provide clients with an estimate of the number of labour hours and the computer time needed to operate the model. The model is currently being test-marketed at five small financial institutions. These financial institutions are listed below, along with the number of combined computer/labour hours used by each institution to run the model once:

Any company that purchases the new model will need to purchase user manuals to access and operate the system. Also required are specialized computer forms that are sold only by Agmar Professionals. User manuals will be sold to clients in cases of 20, at a cost of $320 per case. One manual must be used each time the model is run because each manual includes a non-reusable computer password for operating the system. The specialized computer forms are sold in packages of 250 at a cost of $60 per package. One application of the model requires the use of 50 forms. This amount includes two forms that are generally wasted in each application due to printer alignment errors. The overall cost of the strategic planning model to user clients is $12,000. Most clients will use the model four times each year.
Agmar Professionals must provide its clients with estimates of on- going costs that are incurred in operating the new strategic planning model. They would like to provide this information in the form of standard costs.
Instructions
(a) Determine what factors should be considered in setting a standard for computer/labour hours.
(b) Determine what alternatives for setting a standard for computer/ labour hours might be used.
(c) State what standard for computer/labour hours you would select. Justify your answer.
(d) Determine the standard materials cost associated with the user manuals and computer forms for each application of the strategic planning model.

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Financial Institutions Canadian National First Funds Financial Federal Pacific Coast Lakeview Savings Total Average Computer/Labour Hours Required 25 45 40 30 30 170 34