ure https/ uiz-Analytical Assessment Help Save& Exit Sube Clean, Inc cieans and

Question

ure https/ uiz-Analytical Assessment Help Save& Exit Sube Clean, Inc cieans and waxes floors for commercial customers The company is presently operating at less than capacity with equipment and employees idle at umes. The company recently received an order from a potential customer outside the company's normal geographic service renion for a price of $27000 The size of the proposed job is 40,000 square feet The company's normal service costs are as follows Unit-level materials Unit-level labor Unit-level variable overhead Facility-level overhead $0.36 per square foot $0.43 per square foot $0.26per square foot Allocated at $e.28 per square foot If the company accepts the special offer Multiple Choice The compory will lose $15,000 on the ob The company will lose $26200 n the job Prey So, 15 111 pp 9 3 5 6 O P E R T D F G H

Explanation / Answer

CALCUALTION OF THE RELEVANT COST FOR SPECIAL ORDER FOR 40,000 SQUARE FITS Particulars Amount Remarks Unit Level Material Cost = $                0.36 Per Sq. Ft Relevant Cost beause it is variable cost Unit Levek Labour Cost   $                0.43 Per Sq. Ft Relevant Cost beause it is variable cost Unit Level Variable Overhead $                0.26 Per Sq. Ft Relevant Cost beause it is variable cost Fascility - Level Ovehead    $                     -   Fixed Cost so not Relevant Cost Per unit for Special Order $                1.05 Per Sq. Ft CACLULATION OF THE COST OF 40,000 SQUARE FEET Cost = (40,000 Sq. Feet X $ 1.05) (A) $            42,000 Total Cost Less: Price Offered against the order = (B) $            27,000 Total Revenue   Loss (A - B) $            15,000 So, there is the loss of the $ 15,000 Answer = Option 1 = The company will loss $ 15,000 on the Job.

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