One of the variable production costs is the cost of steel. The standards for steel purchase prices and usage as set at the beginning of 2016 were: Standard price of steel $25.00 per pound Standard quantity of steel per car 100 pounds per car Data on actual steel purchases for 2016 were: Actual cost of steel purchased and used $28,700,000 Actual pounds of steel purchased and used 1,210,000 pounds Recall that budgeted production for the year was 10,000 cars, while actual production was 11,000. 1. At the end of the year a cash bonus of 5% of performance above expectations is split among the members of the relevant departments. Performance above expectations is defined in terms of impact on total profits. What was the impact of the production department’s production activities on the company’s overall profits? What was the impact of the purchasing department’s activities on the company’s overall profits? Which department if any will receive a bonus? What size will that bonus pool be? 2. Are there any caveats in the performance evaluation mechanism used in question 1?