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Homework ( similar to ) points Part 1 of 3 Points: 0 of 1 Arellano Associates is a construction engineering firm that prepares detailed construction
Homework
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Part of
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Arellano Associates is a construction engineering firm that prepares detailed construction drawings for singlefamily homes. The market for this service is very competitive. To compete successfully Arellano must deliver quality service at low cost. Arellano presents the following data for and
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Engineering laborhour costs are variable costs. Engineering support costs for each year depend on the engineering support capacity that Arellano chooses to maintain each year that is the number of jobs it can do each year Engineering support costs do not vary with the actual number of jobs done in a year.
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Requirement Calculate the amount and cost of unused engineering support capacity at the beginning of based on the number of jobs actually done in
The amount of unused capacity is jobs and the cost of unused capacity is
Data table
table Number of jobs billed, Selling price per job,$$ Engineering laborhours, Cost per engineering laborhour,$$ Engineering support capacity number of jobs the firm can do Total cost of engineering support space rent, equipment, etc.$$ Engineering supportcapacity cost per job,$$
Requirements
Calculate the amount and cost of unused engineering support capacity at the beginning of based on the number of jobs actually done in
Suppose Arellano can add or reduce its engineering support capacity in increments of jobs. What is the maximum amount of costs that Arellano could save in by downsizing engineering support capacity?
Arellano, in fact, does not eliminate any of its unused engineering support capacity. Why might Arellano not downsize?
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