Problem 1-31 Cost Data for Managerial Purposes (LO 1-3)

Alameda Instruments (AI) has offered to supply the Air Force with computer monitors at "cost plus 20 percent." AI operates a manufacturing plant that can produce 22,000 monitors per year, but it normally produces 20,000. The costs to produce 20,000 monitors follow:

	Total Cost			Cost per Monitor
Production costs:
Materials	$	1,380,000		$	69
Labor		1,780,000			89
Supplies and other costs that will vary with production		820,000			41
Indirect cost that will not vary with production		660,000			33
Variable marketing costs		1,760,000			88
Administrative costs (all fixed)		1,180,000			59
Totals	$	7,580,000		$	379

Based on these data, company management expects to receive $454.8 (= $379