The company has received an inquiry about a sophisticated product which is estimated to take 84 direct labour hours and 12 machine hours. This product requires two components at a cost of $80 each plus other materials costing $140.

Required:

1)What would be the cost of this job, AND

2)What would be the price (charge to the client) if the firm applies 75% mark-up on cost:

Assuming the firm used DL hours as the cost driver

Assuming the firm used machine hours as the cost drive

3)Why are the prices charged to the customer for the same product different? Explain in one sentence.