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Finch Construction Company is a building contractor specializing in small commercial buildings. The company has the opportunity to accept one of two jobs; it cannot accept both because they must be performed at the same time and Finch does not have the necessary labor force for both jobs. Indeed, it will be necessary to hire a new supervisor if either job is accepted. Furthermore, additional insurance will be required if either job is accepted. The revenue and costs associated with each job follow. Cost Category Contract price Unit-level materials Unit-level labor Unit-level overhead Supervisor's salary. Rental equipment costs Depreciation on tools (zero market value) Allocated portion of company-wide facility-sustaining costs Insurance cost for job Job A $817,000 244,800 250,050 18,600 115,570 25, 100 21,800 12,200 16,500 Job B $683,000 223,950 306,000 13,800 115,570 28,800 21,800 9,300 16,500 Required a. Assume that Finch has decided to accept one of the two jobs. Fill in the information relevant to selecting one job versus the other. Recommend which job to accept. b. Assume that Job A is no longer available. Finch's choice is to accept or reject Job B alone. Fill in the information relevant to this decision. Recommend whether to accept or reject Job B.

Finch Construction Company is a building contractor specializing in small commercial buildings. The company has the opportunity to accept one of two jobs; it cannot accept both because they must be performed at the same time and Finch does not have the necessary labor force for both jobs. Indeed, it will be necessary to hire a new supervisor if either job is accepted. Furthermore, additional insurance will be required if either job is accepted. The revenue and costs associated with each job follow. Cost Category Contract price Unit-level materials Unit-level labor Unit-level overhead Supervisor's salary. Rental equipment costs Depreciation on tools (zero market value) Allocated portion of company-wide facility-sustaining costs Insurance cost for job Job A $817,000 244,800 250,050 18,600 115,570 25, 100 21,800 12,200 16,500 Job B $683,000 223,950 306,000 13,800 115,570 28,800 21,800 9,300 16,500 Required a. Assume that Finch has decided to accept one of the two jobs. Fill in the information relevant to selecting one job versus the other. Recommend which job to accept. b. Assume that Job A is no longer available. Finch's choice is to accept or reject Job B alone. Fill in the information relevant to this decision. Recommend whether to accept or reject Job B.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 13E
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Finch Construction Company is a building contractor specializing in small commercial buildings. The company has the opportunity to accept one of two jobs; it cannot accept both because they must be performed at the same time and Finch does not have the necessary labor force for both jobs. Indeed, it will be necessary to hire a new supervisor if either job is accepted. Furthermore, additional insurance will be required if either job is accepted. The revenue and costs associated with each job follow. Cost Category Contract price Unit-level materials. Unit-level labor Unit-level overhead Supervisor's salary Rental equipment costs Depreciation on tools (zero market value) Allocated portion of company-wide facility-sustaining Insurance cost for job Required Required A B costs Required a. Assume that Finch has decided to accept one of the two jobs. Fill in the information relevant to selecti versus the other. Recommend which job to accept. one job b. Assume that Job A is no longer available. Finch's choice is to accept or reject Job B alone. Fill in the information relevant to this decision. Recommend whether to accept or reject Job B. Decision Contract price Unit-level materials Unit-level labor Unit-level overhead Rental equipment costs Complete this question by entering your answers in the tabs below. Job A $817,000 244,800 250,050 18,600 115,570 25, 100 21,800 12, 200 16,500 Depreciation on tools (zero market value) Allocated portion of companywide facility- sustaining costs B? Job B $683,000 Assume that Job A is no longer available. Finch's choice is to accept or reject Job B alone. Fill in the information relevant to this decision. (Negative amounts should be indicated by a minus sign.) Supervisor's salary Insurance cost for job Contribution to profit (loss) Recommend whether to accept or reject job 223,950 306,000 13,800 115,570 28,800 21,800 9,300 16,500 Job B Show less
Transcribed Image Text:Finch Construction Company is a building contractor specializing in small commercial buildings. The company has the opportunity to accept one of two jobs; it cannot accept both because they must be performed at the same time and Finch does not have the necessary labor force for both jobs. Indeed, it will be necessary to hire a new supervisor if either job is accepted. Furthermore, additional insurance will be required if either job is accepted. The revenue and costs associated with each job follow. Cost Category Contract price Unit-level materials. Unit-level labor Unit-level overhead Supervisor's salary Rental equipment costs Depreciation on tools (zero market value) Allocated portion of company-wide facility-sustaining Insurance cost for job Required Required A B costs Required a. Assume that Finch has decided to accept one of the two jobs. Fill in the information relevant to selecti versus the other. Recommend which job to accept. one job b. Assume that Job A is no longer available. Finch's choice is to accept or reject Job B alone. Fill in the information relevant to this decision. Recommend whether to accept or reject Job B. Decision Contract price Unit-level materials Unit-level labor Unit-level overhead Rental equipment costs Complete this question by entering your answers in the tabs below. Job A $817,000 244,800 250,050 18,600 115,570 25, 100 21,800 12, 200 16,500 Depreciation on tools (zero market value) Allocated portion of companywide facility- sustaining costs B? Job B $683,000 Assume that Job A is no longer available. Finch's choice is to accept or reject Job B alone. Fill in the information relevant to this decision. (Negative amounts should be indicated by a minus sign.) Supervisor's salary Insurance cost for job Contribution to profit (loss) Recommend whether to accept or reject job 223,950 306,000 13,800 115,570 28,800 21,800 9,300 16,500 Job B Show less
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