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Solomon Construction Company is a building contractor specializing in small commercial buildings. The company has the opportunity to accept one of two jobs; it cannot
Solomon 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 Solomon 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 Unit-level overhead Supervisor's salary Rental equipment costs Depreciation on tools (zero market value) Allocated portion of company-wide facility-sustaining costs Insurance cost for job Job A $805,000 245, 200 249,850 18,100 115,270 25,800 21,300 10,700 17,300 Job B $692,000 224,450 306,700 12,800 115,270 28,900 21,300 9,100 17,300 Required a. Assume that Solomon 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. Solomon'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
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