Question
C Associates is an architectural firm that has been in practice only a few years. Because it is a relatively new firm, the market for
C Associates is an architectural firm that has been in practice only a few years. Because it is a relatively new firm, the market for the firms services is very competitive. To compete successfully, C must deliver quality services at a low cost. C presents the following data for 2016 and 2017.
| 2016 | 2017 |
No of jobs billed | 30 | 50 |
Architect labor-hours | 24,000 | 27,000 |
Cost per architect labor hour | $35 | $36 |
Architect support capacity (number of jobs the firm can do) | 60 | 60 |
Total cost of software-implementation support | $168,000 | $180,000 |
Total selling and customer service costs | $1,000,000 | $940,500 |
Architect labor-hour costs are variable costs. Architect support costs for each year depend on the Architect support capacity that C chooses to maintain each year (that is, the number of jobs it can do each year). Architect support costs do not vary with the actual number of jobs done that year.
The cost of unused architectural support capacity at the beginning of 2017, based on the number of jobs actually done in 2017 is:
Select one:
a. Cannot be determined from the data given
b. $60,000
c. $0
d. $30,000
e. $90,000
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