Question: In order to bid more effectively on potential contract work, Elizabeth, the owner of Cheyenne, uses normal costing within her company's job costing system. She
In order to bid more effectively on potential contract work, Elizabeth, the owner of Cheyenne, uses normal costing within her company's job costing system. She needs to provide potential customers with an estimate of the final cost of the project before they'l commit to working with Cheyenne. On her most recent job, Elizabeth bid $70,000 to custom-design a kitchen/living room space for her client (including all DM, DL, and MOH costs plus a mark-up of $23,800 ). Her total cost estimate includes MOH costs of $11,000, using a budgeted MOH rate of $0.50/DL dollar. If the scope of the project should change, for example, if the client later decides to upgrade the appliances, the client will have to absorb the remaining cost. (a) If Elizabeth's original total cost estimate specified a breakdown between DM, DL, and MOH, how much DL and DM cost are included in the original total cost estimate
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