ETHICS CHALLENGE P3
BIN 15-3 Assume that your company sells portable housing to both general contractors and the government. It sells jobs to contractors on a bid basis. A contractor asks for three bids from different manufacturers. The combination of low bid and high quality wins the job. However, jobs sold to the government are bid on a cost-plus basis. This means price is determined by adding all costs plus a profit based on cost at a specified percent, such as 10%. You observe that the amount of
Point: Students could compare responses and discuss differences in concerns with allocating overhead.
Required
Write a half-page memo to your company’s chief financial officer outlining your concerns with overhead allocation.
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CONNECT PLUS-FINANCIAL & MANAGERIAL AC
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- QUESTION 1 Ashby Associates is an architectural fim located in Barbados that has been in practice only a few years. The market for architectural services is very competitive. To compete successfully, Ashby must deliver quality services at a low cost. Ashby presents the following data for 2018 and 2019. 2018 2019 Number of jobs billed 2. Selling price per job 3. Architect labour hours Cost per architect labour hour Architect/software support capacity (mmber of jobs the firm cando) Total cost of software-inplementation support 7. Software-inplementation support-capacity cost per job (row 6 Tow 5) 1. 40 50 $32,000 24,000 $30,000 27,000 $36 4. $35 5. 60 60 6. $168,000 $2,800 $180,000 $3,000 Architect labor-hour costs are variable costs. Architect (software) support costs for each year depend on the Architect support capacity that Ashby chooses to maintain each year (that is, the number of jobs it can do each year). Architect support costs do nþt vary with the actual mumber of jobs done…arrow_forwardpre.9arrow_forwardPlease do not give solution in image format thankuarrow_forward
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