Bonivo Inc manufactures computers from commodity components to client specifications. The company has historically tracked only the cost of components to computers, and computer selling prices, or bids, have been based solely on the cost of components plus a makr up sufficient to cover the other operating costs. In recent years, the company has encountered increasing price pressure from customers, and as a result, computers have often been sold at less than the full markup price causing continually decreasing profits for the firm. As you have provided other finanacial services to Bonivo Inc in the past, company management has asked you for guidance regarding approaches that could be taken to better amange the firm's profits and prices. You decide that a job order costing system could be helpful to Bonivo.

a. Explain how a job order costing systme could help Bonivo better control costs and profits.

b. Explain why Bonivo should not base computer prices only on compenent costs plus a markup.