Case 2: The Construction Company A construction company specializes in pouring foundations for housing units. It also has a division performing masonry work. In the last several years masonry work has become unprofitable because of a recession. The head of the masonry unit says: 1. We need to bid low for jobs in order to keep a cadre of skilled masons. When the recession ends, we will not have the capability of getting back into doing skilled masonry work if we don't have a viable group of masons. If necessary, we should accept modest losses on the job and not cover direct costs. 2. We should be evaluated as a service unit. We do work for the construction company clients keeping other construction companies out of our market area. Evaluate the masonry managers claims. Is the masonry department a service department? Should the company continue to keep a masonry unit if it is not turning a profit?

Case 2: The Construction Company A construction company specializes in pouring foundations for housing units. It also has a division performing masonry work. In the last several years masonry work has become unprofitable because of a recession. The head of the masonry unit says: 1. We need to bid low for jobs in order to keep a cadre of skilled masons. When the recession ends, we will not have the capability of getting back into doing skilled masonry work if we don't have a viable group of masons. If necessary, we should accept modest losses on the job and not cover direct costs. 2. We should be evaluated as a service unit. We do work for the construction company clients keeping other construction companies out of our market area. Evaluate the masonry managers claims. Is the masonry department a service department? Should the company continue to keep a masonry unit if it is not turning a profit?

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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