Ken Owens Construction specializes in small additions andrepairs. His normal charge is $400/day plus materials. Dueto his physical condition, David, an elderly gentleman,needs a downstairs room converted to a bathroom. Ken hasproduced a bid for $5,300 to complete the bathroom. Hedid not provide David with the details of the bid. However,they are shown here.Ken's Bid Detail DollarsDirect Material$2,200Direct Labor1,700Variable overhead300Fixed overhead700Profit400$5,300A. The town's social services has asked Ken if he couldreduce his bid to $4,200. Should Ken accept the counteroffer?Current BidNew BidDirect Material$2,200$2,200Direct Labor1,7001,700Variable overhead300300Fixed overhead700Profit400$5,300$4,200B. How much would his income be reduced?C. If the town's social services guaranteed him another jobnext month at his normal price, could he accept this job at$4,200?

The answers for the questions on accepting new offer by the Town's social services are given in…

A. The town's social services has asked Ken if he could reduce his bid to $4,200. Should Ken accept the counter offer? Current Bid New Bid Direct Material $2,200 $2,200 Direct Labor 1,700 1,700 Variable overhead 300 300 Fixed overhead 700 Profit 400 $5 300 $4 200

A. The town's social services has asked Ken if he could reduce his bid to $4,200. Should Ken accept the counter offer? Current Bid New Bid Direct Material $2,200 $2,200 Direct Labor 1,700 1,700 Variable overhead 300 300 Fixed overhead 700 Profit 400 $5 300 $4 200

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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