Myl 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 Myl 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.

Required:

a. Assume that Myl has decided to accept one of the two jobs. Identify the information relevant to selecting one job versus the other. Recommend which job to accept and support your answer with appropriate computations.

b. Assume that Job A is no longer available. Myl’s choice is to accept or reject Job B alone. Identify the information relevant to this decision. Recommend whether to accept or reject Job B. Support your answer with appropriate computations.

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Cost Category Contract price Unit-level materials Unit-level labor Job A Job B $700,000 $600,000 250,000 220,000 240,000 243,000 Unit-level overhead 17,000 14,000 Supervisor's salary 80,000 80,000 Rental equipment costs 25,000 28,000 Depreciation on tools (zero market value) 20,000 20,000 Allocated portion of companywide facility-sustaining costs 9,000 8,000 Insurance cost for job 16,000 16,000