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Marx Conference Solutions specializes in the design and installation of meeting and conference centers for large corporations. When bidding on jobs, the company estimates product
Marx Conference Solutions specializes in the design and installation of meeting and conference centers for large corporations. When bidding on jobs, the company estimates product cost and direct labor for installers and marks up the total cost by 30 percent. On a recent job for Oriole Industries, the company set its price as follows: The job turned out to be a big hassle. Oriole requested 25 change orders, although the dollar value of the products it requested changed very little. The company also returned 33 items that had extremely minor flaws (scratches that were barely visible and would be expected in normal shipping). Oriole also requested seven meetings with designers taking 44 hours before its plan was finalized. Normally, only two or three meetings are necessary. Sandra Robinson, controller for Marx, decided to conduct a customer profitability analysis to determine the profitability of Oriole. She grouped support costs into three categories with the following drivers: Calculate the indirect service costs related to the job performed for Oriole Industries. eTextbook and Media Assistance Used
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