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Perez Construction Company is a building contractor specializing in small commercial buildings. The company has the opportunity to accept one of two jobs; it
Perez Construction Company is a building contractor specializing in small commercial buildings. The company has the opportunity to accept one of two jobs; it cannot accept both because they must be performed at the same time and Perez does not have the necessary labor force for both jobs. Indeed, it will be necessary to hire a new supervisor if either job is accepted. Furthermore, additional Insurance will be required if either job is accepted. The revenue and costs associated with each job follow. Cost Category Contract price Unit-level materials Unit-level labor Job A $808,000 Job B $685,000 244,400 224,650 250,150 305,100 Unit-level overhead 18,600 13,700 Supervisor's salary 116,370 116,370 Rental equipment costs 26,200 29,100 Depreciation on tools (zero market value) 20,000 20,000 Allocated portion of company-wide facility-sustaining costs Insurance cost for job 11,600 17,600 10,500 17,600 Required a. Assume that Perez has decided to accept one of the two jobs. Fill in the Information relevant to selecting one job versus the other. Recommend which job to accept. b. Assume that Job A is no longer available. Perez's choice is to accept or reject Job B alone. Fill in the Information relevant to this decision. Recommend whether to accept or reject Job B. Complete this question by entering your answers in the tabs below. Required A Required B Assume that Perez has decided to accept one of the two jobs. Fill in the information relevant to selecting one job versus the other. (Negative amounts should be indicated by a minus sign.) Decision Contract price Unit-level materials Unit-level labor Unit-level overhead Supervisor's salary Rental equipment costs Depreciation on tools (zero market value) Allocated portion of companywide facility-sustaining costs Insurance cost for job Contribution to profit (loss) Recommend which job to accept? Job A Job B < Required A Required B >
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