Q 40

Tom is a carpenter who specializes in bathroom renovations for single-owner homes. He believes that he has been underbidding his projects and losing out on potential profit that could make all of the difference for his business's continued viability. He is putting together an estimate for a potential client and has determined the following activities: Activitiy Cost Driver Rate Estimated Use for Job Demo of Existing Space Square Footage $2.50 /square foot 350 square feet Cabinet Installation Cabinets installed $175 /hour 4 hours Tile Installation Pieces of tile laid $0.74 /tile 1230 tiles Previously, Tom was billing at a flat rate of $6 per square foot with no additional markups. Tom would like to add a 25% markup to the cost to arrive at the final bid price that will be given to the customer. Using Activity-Based Costing (ABC), how much additional profit will Tom make from this prospective client? O $394.00 O $385.20 O ($227.30) O $1006.50