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Pink Design Partners is comprised of 3 interior design consultants. Each works at a different hourly rate owing to their different levels of experience and

Pink Design Partners is comprised of 3 interior design consultants. Each works at a different hourly rate owing to their different levels of experience and expertise. They have two employees: the receptionist paid a $26,000 per year salary and a Bookkeeper that they pay a salary of $52,000 per year. They have other costs for rent, advertising, insurance etc. The Partnership caters to two different types of clients: Residential and Commercial.

The Partnership prices their jobs by marking up the full "absorption cost" of each job by 40%.

Each Partner that works on each client's job tracks their time by the hour. Variable Overhead is charged directly to the Client's job whereas Fixed Overhead is charged based upon a pre-determined Fixed Overhead Rate of $20 for each Direct Labour Hour worked.

Dena charges a rate of $100 per hour

Lena charges a rate of $150 per hour, and

George charges a rate of $120 per hour

It was a busy week at Pink Design Partners. The following events transpired as the Partners rushed to complete a Client's job (Ms. Fussy), a new living room design on time...and they did!!

-George worked 12 hours on the job

-Dena worked 9 hours on the job

-Lena worked 5 hours on the job

-It was the end of the pay period and employees had to be paid

-Uber rides during the week amounted to $400, half of which was related to travelling to Ms. Fussy's house and back

-The Partners also spent $600 on lunches entertaining architects in the hope of gaining new business referrals.

a) How much should the Partnership charge Ms. Fussy for the completed job? Show detailed supporting calculations

b) If Pink Design Partners were considering closing down their Commercial Client division because the division was showing a Net Loss, provide 2 factors that should be considered before doing so and why.

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