Essentially, powder coating involves the application of powder (finely divided particles of organic polymer containing pigments, fillers, and additives) to a surface, after which the powder is fused into a continuous film by the application of heat or radiant energy. The process results in a durable finish that resists rust.

Required

a. Based on the limited information, estimate the full cost of the job in the current year. Assume the company uses one company-wide overhead rate.

b. What would have been the cost of the job in part (a) in the prior year?

c. Bill McCally, plant manager, observed: “Last year, jobs like the one we did for Cedargreen Enterprises cost less. But I know we’re not less efficient at handling small jobs. We use the same equipment, the same labor, and the same products on small jobs this year as last year, and yet the accounting system is making small jobs look more expensive!”

Explain why the accounting system is making small jobs appear to be more costly in the current year.

d. Does the fact that small jobs have a higher cost in the current year suggest that prices for small jobs should be increased?