Chapter 5 - Tutorial Solutions

Chapter 5 - Tutorial Solutions - Problem 5-25 4. The...

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Problem 5-25 4. The objectivity of the interview data can be questioned since the on-site work supervisors were undoubtedly trying to prove their case about the cost of non-routine jobs. Nevertheless, the activity- based costing data certainly suggest that dramatic differences exist in the costs of jobs. While some of the costs may be difficult to adjust in response to changes in activity, it does appear that the standard bid of $4,000 per thousand square metres may be substantially under the company’s cost for non-routine jobs. Even though it may be difficult to detect nonroutine situations before work begins, the average additional cost of $19,960 for non- routine work suggests that the estimator should try. And if a nonroutine situation is spotted, this should be reflected in the bid price. Savvy competitors are likely to bid less than $4,000 per thousand square metres on routine work and substantially more than $4,000 per thousand square metres on non-routine work. Consequently, Vance Asbestos Removal may find that its product mix shifts
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Chapter 5 - Tutorial Solutions - Problem 5-25 4. The...

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