hw 6.3

As directed by top management, I simply multiply the square footage by $2.50 to determine the bid price. Since our average cost is only $2.23 per square foot, that leaves enough cushion to take care of the additional costs of nonroutine work that shows up. Besides, it is difficult to know what is routine or not routine until you actually start tearing things apart."

To shed light on this controversy, the company initiated an activity-based costing study of all of its costs. Data from the activity-based costing system follow: