Problem 6-24A (Algo) Context-sensitive relevance LO 6-1

Finch 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 Finch 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	Job A			Job B
Contract price	$	809,000		$	698,000
Unit-level materials		244,300			225,350
Unit-level labor		250,650			305,800
Unit-level overhead		18,100			14,500
Supervisors salary		115,570			115,570
Rental equipment costs		25,900			28,200
Depreciation on tools (zero market value)		20,700			20,700
Allocated portion of company-wide facility-sustaining costs		11,200			8,800
Insurance cost for job		17,000			17,000

Required

1. Assume that Finch 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.

2. Assume that Job A is no longer available. Finch'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.