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Blue Skies Inc. is a retail gardening company that is piloting a new strategic initiative aimed at increasing gross profit. Currently, the companys gross profit is 21% of sales, and its target gross profit percentage is 26%. The companys current monthly sales revenue is $600,000.

The new initiative being piloted is to produce goods in-house instead of buying them from wholesale suppliers. Its in-house production process has two procedures. The makeup of the costs of production for Procedure 1 is 40% direct labor, 45% direct materials, and 15% overhead. The makeup of the costs of production for Procedure 2 is 50% direct labor, 25% direct materials, and 25% overhead. Assume that Procedure 1 costs twice as much as Procedure 2.

Required:

1. Determine what the cost of labor, materials, and overhead for both Procedures 1 and 2 would need to be for the company to meet its target gross profit.

Line Item Description	Amount
Direct Labor	$fill in the blank 1
Direct Materials	fill in the blank 2
Overhead	fill in the blank 3
Total	$fill in the blank 4

Line Item Description	Amount
Direct Labor	$fill in the blank 5
Direct Materials	fill in the blank 6
Overhead	fill in the blank 7
Total	$fill in the blank 8

CSR initiative were to enable the company to meet its target gross profit percentage without changing any other costs. Maximum now rnst of D1 nuprhear materials. d CSR initiative were to enable the company to meet its target gross profit percentage without changing any other costs. Maximum now rnst of D1 nuprhear materials. d

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