Clean, Inc. cleans and waxes floors for commercial customers. The company is presently operating at less than capacity with equipment and employees idle at times. The company recently received an order from a potential customer outside the company's normal geographic service region for a price of $25,000. The size of the proposed job is 38,000 square feet. The company's normal service costs are as follows: Unit-level materials Unit-level labor Unit-level variable overhead 0.24 per square foot Facility-level overhead $0.34 per square foot $0.41 per square foot Allocated at $0.26 per square foot If the company accepts the special offer: Multiple Choice a.The company will lose $12,620 on the job b.The company will lose $22,500 on the job. c.The company will earn $12,080 on the job. d.The company will lose S3,500 on the job.

Respuesta :

Answer:

a) The company will lose $12,620 on the job

Explanation:

Given:

Offer received

• Price of order = $25,000

• Size of proposed job = 38,000sq.ft

Using the company's normal service costs and calculating the relevant cost for special order for 38,000sq.ft priced at $25,000 we have:

•Unit level material = ($0.24 * 38,000)

•Unit level labor = ($0.34 * 38000)

•unit level overhead = ($0.41 * 38,000)

Thus, we have:

$25,000 - [(0.24×38000)+(0.34x38000)+(0.41×38000)]

= -$12,620

Therefore, the company will lose $12,620 on the job