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Ken Owens Construction specializes in small additions and repairs. His normal charge is $500/day plus materials. Due to his physic condition, David, an elderly gentleman,
Ken Owens Construction specializes in small additions and repairs. His normal charge is $500/day plus materials. Due to his physic condition, David, an elderly gentleman, needs a downstairs room converted to a bathroom. Ken has produced a bid for $5,000 to complete the bathroom. He did not provide David with the details of the bid. However, they are shown here. Ken's Bid Detail Dollars Direct Material $2,300 Direct Labor 1,700 Variable overhead 100 Fixed overhead 500 Profit 400 $5,000 A. The town's social services has asked Ken if he could reduce his bid to $4,100. Should Ken accept the counter offer? Current Bid New Bid Direct Material $2,300 $2,300 Direct Labor 1,700 1,700 Variable overhead 100 100 Fixed overhead 500 Profit 400 $5,000 $4,100 Direct Material $2,300 $2,300 Direct Labor 1,700 1,700 Variable overhead 100 100 Fixed overhead 500 Profit 400 $5,000 $4,100 B. How much would his income be reduced? C. If the town's social services guaranteed him another job next month at his normal price, could he accept this job at $4,100
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