COST ASSIGNMENT, DIRECT COSTS
Harry Whipple, owner of an inkjet printer, has agreed to allow Mary and Natalie, two friends who are pursuing master's degrees, to print several papers for their graduate courses. However, he has imposed two conditions. First, they must supply their own paper. Second, they must pay Harry a fair amount for the usage of the ink cartridge. Harry's printer takes two types of cartridges, a black one and a color one that contains the inks necessary to print in color. Black replacement cartridges cost $25.50 each and print approximately 850 pages. The color cartridge replacement cost $31 and prints approximately 310 color pages. One ream of paper costs $2.50 and contains 500 sheets. Mary's printing requirements are for 500 pages, while Natalie's are for 1,000 pages.
Required:
1. Assuming that both women write papers using text only (i.e., black ink), what is the total amount owed to Harry by Mary? By Natalie?
2. What is the total cost of printing (ink and paper) for Mary? For Natalie?
3. Now suppose that Natalie illustrates her writing with many large colorful pie charts and pictures and that about 20 percent of her total printing is primarily color. Mary uses no color illustrations. What is the total amount owed to Harry by Natalie? What is the total cost of printing (ink and paper) for Natalie?