Nash Bridges Construction Company is a building contractor serving the Gulf Coast region. The company recently bid on a Gulf-front causeway improvement in Biloxi, Mississippi. Nash Bridges has incurred bid development and job cost-out expenses of $25,000 prior to submission of the bid. The bid was based on the following projected costs:

A. What is Nash Bridges€™ minimum acceptable (breakeven) contract price, assuming that the company is operating at peak capacity?
B. What is the Nash Bridges€™ minimum acceptable contract price if an economic downturn has left the company with substantial excesscapacity?

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Cost Category Bid development and job cost-out expenses Materials Labor (50,000 hours $26) Variable overhead (40% of direct labor) Allocated fixed overhead (6% of total costs) Amount $25,000 881,000 300,000 520,000 174,000 $2.900.000 Total costs