Question11 (16 points) Gaudi Des. is an architectural firm that has been in practice only a...
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Question11 (16 points) Gaudi Des. is an architectural firm that has been in practice only a few years. Because it is a relatively new firm, the market for the firm's services is very competitive. To compete successfully, Gaudi must deliver quality services at a low cost. Gaudi presents the following data for 2016 and 2017. 1. Number of jobs billed 2. Selling price per job 3. Architect labor-hours 4. Cost per architect labor-hour 5. Architect support capacity (number of jobs the firm can do) 6. Total cost of software-implementation support 7. Software-implementation support-capacity cost per job (row 6 + row 5) B. Calculate the cost effect of growth. (3 points) C. Calculate the revenue effect of price-recovery. (2 points) 2016 D. Calculate the cost effect of price-recovery. (3 points) 40 $32,000 24,000 $35 60 $168,000 $2,800 Architect labor-hour costs are variable costs. Architect support costs for each year depend on the Architect support capacity that Gaudi chooses to maintain each year (that is, the number of jobs it can do each year). Architect support costs do not vary with the actual number of jobs done that year. A. Calculate the revenue effect of growth. (2 points) 2017 E. Calculate productivity component of cost changes. (3 points) 50 $30,000 27,000 $36 60 $180,000 $3,000 F. Explain (or summarize) the change in operating income from 2016 to 2017 using answers from A-E. (3 points) Question11 (16 points) Gaudi Des. is an architectural firm that has been in practice only a few years. Because it is a relatively new firm, the market for the firm's services is very competitive. To compete successfully, Gaudi must deliver quality services at a low cost. Gaudi presents the following data for 2016 and 2017. 1. Number of jobs billed 2. Selling price per job 3. Architect labor-hours 4. Cost per architect labor-hour 5. Architect support capacity (number of jobs the firm can do) 6. Total cost of software-implementation support 7. Software-implementation support-capacity cost per job (row 6 + row 5) B. Calculate the cost effect of growth. (3 points) C. Calculate the revenue effect of price-recovery. (2 points) 2016 D. Calculate the cost effect of price-recovery. (3 points) 40 $32,000 24,000 $35 60 $168,000 $2,800 Architect labor-hour costs are variable costs. Architect support costs for each year depend on the Architect support capacity that Gaudi chooses to maintain each year (that is, the number of jobs it can do each year). Architect support costs do not vary with the actual number of jobs done that year. A. Calculate the revenue effect of growth. (2 points) 2017 E. Calculate productivity component of cost changes. (3 points) 50 $30,000 27,000 $36 60 $180,000 $3,000 F. Explain (or summarize) the change in operating income from 2016 to 2017 using answers from A-E. (3 points)
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A The revenue effect of growth is an increase in revenue of 10000 Revenue effect of g... View the full answer
Related Book For
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 978-0134475585
16th edition
Authors: Srikant M. Datar, Madhav V. Rajan
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