Metro Interior Designs has boen requested to propare a bid to docorate four model homes for...

  

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Metro Interior Designs has boen requested to propare a bid to docorate four model homes for a new dovelopmont. Winning the bid would be a big boost for sales reprosentative John Driscoll, who works entirely on commission. Sabrina Grant, the cost accountant for Metro, prepares the bid based on the following cost information: E (Click the icon to view the cost information.) 6 (Click the icon to view the additional information.) Read the reguirements. Requirement 1. Is the $450 spent on the baskelball fickels relevant to the bid decision? Why or why nol? The $450 spent on the basketball tickets is a V cost and is, therefore, V to the bid decision. Metro will incur the $450 cost i Data Table ativ Direct costs Design costs $ 25,000 Furniture and artwork 68,000 Direct labor 13,000 Delivery and installation 27,000 Overhead costs Design software 5,500 Furniture handling 5,300 4,200 General and administration Total overhead costs 15,000 $ 148,000 Full product costs Print Done Clear ATT %24 More Info Based on the company policy of pricing at 130% of full cost, Grant gives Doogan a figure of $192,400 to submit for the job. Driscoll is very concerned. He tells Grant that at that price, Metro has no chance of winning the job. He confides in her that he spent $450 of company funds to take the developer to a basketball playoff game where the developer disclosed that a bid of $182,000 would win the job. He hadn't planned to tell Grant because he was confident that the bid she developed would be below that amount. Driscoll reasons that the $450 he spent will be wasted if Metro doesn't capitalize on this valuable information. In any case, the company will still make money if it wins the bid at $182,000 because it is higher than the full cost of $148,000. Print Done i Requirements Is the $450 spent on the basketball tickets relevant to the bid decision? Why or why not? 1. 2. Grant suggests that if Driscoll is willing to use cheaper furniture and artwork, he can achieve a bid of $182,000. The designs have already been reviewed and accepted and cannot be changed without additional cost, so the entire amount of reduction in cost will need to come from furniture and artwork. What is the target cost of furniture and artwork that will allow Driscoll to submit a bid of $182,000 assuming a target markup of 30% of full cost? 3. Evaluate whether Grant's suggestion to Driscoll to use the developer's tip is unethical. Would it be unethical for Driscoll to reduce the cost of furniture and artwork to arrive at a lower bid? What steps should Driscoll and Grant take to resolve this situation? Print Done Metro Interior Designs has boen requested to propare a bid to docorate four model homes for a new dovelopmont. Winning the bid would be a big boost for sales reprosentative John Driscoll, who works entirely on commission. Sabrina Grant, the cost accountant for Metro, prepares the bid based on the following cost information: E (Click the icon to view the cost information.) 6 (Click the icon to view the additional information.) Read the reguirements. Requirement 1. Is the $450 spent on the baskelball fickels relevant to the bid decision? Why or why nol? The $450 spent on the basketball tickets is a V cost and is, therefore, V to the bid decision. Metro will incur the $450 cost i Data Table ativ Direct costs Design costs $ 25,000 Furniture and artwork 68,000 Direct labor 13,000 Delivery and installation 27,000 Overhead costs Design software 5,500 Furniture handling 5,300 4,200 General and administration Total overhead costs 15,000 $ 148,000 Full product costs Print Done Clear ATT %24 More Info Based on the company policy of pricing at 130% of full cost, Grant gives Doogan a figure of $192,400 to submit for the job. Driscoll is very concerned. He tells Grant that at that price, Metro has no chance of winning the job. He confides in her that he spent $450 of company funds to take the developer to a basketball playoff game where the developer disclosed that a bid of $182,000 would win the job. He hadn't planned to tell Grant because he was confident that the bid she developed would be below that amount. Driscoll reasons that the $450 he spent will be wasted if Metro doesn't capitalize on this valuable information. In any case, the company will still make money if it wins the bid at $182,000 because it is higher than the full cost of $148,000. Print Done i Requirements Is the $450 spent on the basketball tickets relevant to the bid decision? Why or why not? 1. 2. Grant suggests that if Driscoll is willing to use cheaper furniture and artwork, he can achieve a bid of $182,000. The designs have already been reviewed and accepted and cannot be changed without additional cost, so the entire amount of reduction in cost will need to come from furniture and artwork. What is the target cost of furniture and artwork that will allow Driscoll to submit a bid of $182,000 assuming a target markup of 30% of full cost? 3. Evaluate whether Grant's suggestion to Driscoll to use the developer's tip is unethical. Would it be unethical for Driscoll to reduce the cost of furniture and artwork to arrive at a lower bid? What steps should Driscoll and Grant take to resolve this situation? Print Done