Question
Farmer Joe is evaluating three (3) bids to supply fence hardware for the 5 acres of pasture that need to be fenced. Brady Fences Ltd.
Farmer Joe is evaluating three (3) bids to supply fence hardware for the 5 acres of pasture that need to be fenced. Brady Fences Ltd. submits a bid of $45 per unit with a defect rate of 1.5%; Fence & Frame Co.'s bid is $40 per unit with a defect rate of 2%; Spade Structure Inc.'s bid is $30 per unit with a defect rate of 5%. If a section of fence fails, it costs an average of $400 in herding costs and other losses to round up all the alpacas. Farmer Joe believes it will take 1,500 units of fence to fence in this pasture configuration. A) Calculate the total cost for each bid. Please show all calculations. (9 marks) B) Which bidder has the lowest total cost?
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Management and Cost Accounting
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