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1. Zachary Construction Company is a building contractor specializing in small commercial buildings. The company has the opportunity to accept one of two jobs; it

1. Zachary 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 Zachary 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 Job A Job B
Contract price $ 816,000 $ 683,000
Unit-level materials 245,400 223,850
Unit-level labor 250,050 305,100
Unit-level overhead 18,300 14,100
Supervisors salary 116,570 116,570
Rental equipment costs 24,900 28,700
Depreciation on tools (zero market value) 20,700 20,700
Allocated portion of companywide facility-sustaining costs 12,200 8,700
Insurance cost for job 17,000 17,000

Required

Assume that Zachary 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.

Decision Job A Job B
Contract price
Unit-level materials
Unit-level labor
Unit-level overhead
Supervisors salary
Rental equipment costs
Depreciation on tools (zero market value)
Allocated portion of companywide facility-sustaining costs
Insurance cost for job
Contribution to profit (loss) $0
Recommend which job to accept?

Assume that Job A is no longer available. Zachary'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 Job B
Contract price
Unit-level materials
Unit-level labor
Unit-level overhead
Rental equipment costs
Depreciation on tools (zero market value)
Allocated portion of companywide facility-sustaining costs
Supervisors salary
Insurance cost for job
Contribution to profit (loss)
Recommend whether to accept or reject job B?

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