Question 6 of 6

Question 6 of 6 View Policies Current Attempt in Progress Ceradyne Conference Solutions specializes in the design and installation of meeting and conference centers for large corporations. When bidding on jobs. the company estimates product cost and direct labor for installers and marks up the total cost by 30 percent. On a recent job for Crane Industries. the company set its price as follows: Product costs including podiums, seating, lighting. etc. Installer salaries Total Markup at 30 percent Bid price $174,200 24,600 198,800 59,640 $258,440 The job turned out to be a big hassle. Crane requested 24 change orders, although the dollar value of the products it requested changed very little. The company also returned 33 items that had extremely minor flaws (scratches that were barely visible and would be expected in normal shipping). Crane also requested seven meetings with designers taking 39 hours before its plan was finalized. Normally, only or three meetings are necessary. Patricia Johnson, controller for Ceradyne, decided to conduct a customer profitability analysis to determine the profitability of Crane. She grouped support costs into three categories with the following drivers: Change orders Number of returns Design meeting hours 790 1.060 1,330 change orders product returns meeting hours $203,030 75,260 82,460 Calculate the indirect service costs related to the job performed for Crane Industries. Change orders Returns Design hours Total