Reference no: EM133169251

Question - Sweet Acacia Professionals, a management consulting firm, specializes in strategic planning for financial institutions. Anthony Hall and Jason King, 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, Anthony and Jason 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:

Financial Institutions Computer/Labour Hours Required

Canadian National 21.00

First Funds 38.00

Financial Federal 34.00

Pacific Coast 26.00

Lakeview Savings 26.00

Total 145.00

Average 29.00

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 Sweet Acacia Professionals. User manuals will be sold to clients in cases of 16, at a cost of $272 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 210 at a cost of $42 per package. One application of the model requires the use of 40 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 $10,200. Most clients will use the model four times each year.

Sweet Acacia Professionals must provide its clients with estimates of ongoing costs that are incurred in operating the new strategic planning model. They would like to provide this information in the form of standard costs.

Required - Determine the standard materials cost associated with the user manuals and computer forms for each application of the strategic planning model.