PROBLEM 8-7. Activity-Based Pricing Consider the information in Problem 8-6.

Lauden Conference Solutions has decided to adopt an activity-based pricing scheme.

On future jobs, the company will charge a 30 percent markup on the sum of product costs plus installer salaries. In addition, the company will charge $300 per change order, $100 per product return for products that are in excellent condition, and $75 per meeting hour with a Lauden conference room designer.

Required

a. What would the profit be on the order from Orvieto in Problem 8-6?

b. Identify pros and cons of adopting the activity-based pricing scheme.