Nassau Recycling Company recycles paper and cardboard into recycling packaging materials. For the coming year the company estimates total manufacturing overhead to be $369,250. The companys managers are not sure if direct labour hours (estimated to be 9,980) or machine hours (estimated at 18,463 hours) is the best allocation base to use for allocating manufacturing overhead. The company bids for jobs using a 31% markup over total manufacturing cost. After the new fiscal year Takeiteasy Company asked Nassau Recycling to bid for a job that will take 1,980 machine hours and 1,700 direct labour hours to produce. The direct labour cost will be $12 per hour, and the direct materials will total $25,300.

Required:

A Calculate the total job cost and bid price if Nassau Recycling decided to use direct labour hours as the manufacturing overhead allocation base for the year.

B Calculate the total job cost and bid price if Nassau Recycling decided to use machine hours as the manufacturing overhead allocation base for the year.

C In addition to this bid, Nassau Recycling received an order from Cheaprates Supply who agrees to buy the same job for $125,000. Justify under what circumstances Nassau Recycling will accept or not accept this offer.