Refer to the information on Ronaldo Associates in Try It! 12-2.

Data from Try it 12-2

Strategic analysis of operating income. Ronaldo Associates is a construction engineering firm that prepares detailed construction drawings for single-family homes. The market for this service is very competitive. To compete successfully Ronaldo must deliver quality service at low cost. Ronaldo presents the following data for 2016 and 2017.

Required 1. Calculate the amount and cost of unused engineering support capacity at the beginning of 2017, based on the number of jobs actually done in 2017.
2. Suppose Ronaldo can add or reduce its engineering support capacity in increments of 50 jobs. What is the maximum amount of costs that Ronaldo could save in 2017 by downsizing engineering support capacity?
3. Ronaldo, in fact, does not eliminate any of its unused engineering support capacity.
Why might Ronaldo not downsize?

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1. Number of jobs billed 2. Selling price per job 3. Engineering labor-hours 4. Cost per engineering labor-hour 5. Engineering support capacity (number of jobs the firm can do) 6. Total cost of engineering support (space rent, equipment, etc.) 7. Engineering support-capacity cost per job (row 6 row 5) 2016 400 2017 500 $ 3,100 $ 3,200 24,000 27,000 $ 35 $ 36 600 600 $180,000 $192,000 $ 300 $ 320