5. Ken Owens Construction specializes in small additions and repairs. His normal charge is $400/day plus materials. Due to his physical condition, David, an elderly gentleman, needs a downstairs room converted to a bathroom. Ken has produced a bid for $5000 to complete the bathroom. He did not provide David with the details of the bid. However, they are shown here. Chapter 10 Homework Ken's Bid Detail Dollars Direct material Direct labor Variable overhead Fixed overhead Profit $2,200 1,600 200 600 400 $5,000 A. The town's social services has asked Ken if he could reduce his bid to $4,000 Should Ken accept the counter offer? Current Bid New Bid Direct material Direct labor $2,200 $2,200 1,600 1,600 Variable overhead Fixed overhead Profit 200 200 600 400 $5,000 $4,000 B. How much would his income be reduced? C. If the town's social services guaranteed him another job next month at his normal price, could he accept this job at $4,000?
5. Ken Owens Construction specializes in small additions and repairs. His normal charge is $400/day plus materials. Due to his physical condition, David, an elderly gentleman, needs a downstairs room converted to a bathroom. Ken has produced a bid for $5000 to complete the bathroom. He did not provide David with the details of the bid. However, they are shown here. Chapter 10 Homework Ken's Bid Detail Dollars Direct material Direct labor Variable overhead Fixed overhead Profit $2,200 1,600 200 600 400 $5,000 A. The town's social services has asked Ken if he could reduce his bid to $4,000 Should Ken accept the counter offer? Current Bid New Bid Direct material Direct labor $2,200 $2,200 1,600 1,600 Variable overhead Fixed overhead Profit 200 200 600 400 $5,000 $4,000 B. How much would his income be reduced? C. If the town's social services guaranteed him another job next month at his normal price, could he accept this job at $4,000?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:5. Ken Owens Construction specializes in small additions and repairs. His normal charge is
$400/day plus materials. Due to his physical condition, David, an elderly gentleman,
needs a downstairs room converted to a bathroom. Ken has produced a bid for $5000 to
complete the bathroom. He did not provide David with the details of the bid. However,
they are shown here.
Chapter 10 Homework
Ken's Bid Detail Dollars
Direct material
Direct labor
Variable overhead
Fixed overhead
Profit
$2,200
1,600
200
600
400
$5,000
A. The town's social services has asked Ken if he could reduce his bid to $4,000 Should Ken accept
the counter offer?
Current Bid
New Bid
Direct material
Direct labor
$2,200
$2,200
1,600
1,600
Variable overhead
Fixed overhead
Profit
200
200
600
400
$5,000
$4,000
B. How much would his income be reduced?
C. If the town's social services guaranteed him another job next month at his normal price, could
he accept this job at $4,000?
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