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