Refer to the data for AnimPix, Inc., in Problem 8-26. In addition, the company has provided the following details concerning its activity rates:

Management has provided the following ease of adjustment codes for the various costs:
Ease of
Adjustment Code
Technical staff salaries . . . . . . . . . . . . . . . . Red
Animation equipment depreciation . . . . . . . Red
Administrative wages and salaries . . . . . . Yellow
Supplies costs . . . . . . . . . . . . . . . . . . . . . . . Green
Facility costs . . . . . . . . . . . . . . . . . . . . . . . . Red
These codes created some controversy. In particular, some administrators objected to coding their own salaries Yellow, while the technical staff salaries were coded Red. However, the founders of the firm overruled these objections by pointing out that €œour technical staff is our most valuable asset. Good animators are extremely difficult to find, and they would be the last to go if we had to cut back.€

Required:
1. Using Exhibit 8A€“3 as a guide, determine the cost of the local commercials market. (Think of the local commercials market as a product.)
2. Using Exhibit 8A€“5 as a guide, prepare an action analysis report concerning the local commercials market. (This company has no direct materials or direct labor costs.)
3. What would you recommend to management concerning the local commercialsmarket?

Activity Rates Animation Animation Concept Production Administration Contract $5,000 1,500 200 600 400 $1,800 Animation equipment depreciation Administrative wages and salaries Supplies costs Facility costs Total 600 1,400 300 200 4,600 100 100 $6,000 $7.700 $6,600