Fogelin Promotional Services Uses a Job Order System for Costing

question 43

Multiple Choice

Fogelin Promotional Services uses a job order system for costing and billing promotional services for dance and ballet performances. Fogelin has 4 public relations specialists, plus an office staff. At the beginning of 2012, Fogelin estimated the total cost of salaries and benefits for the public relations specialists at $403,200, and a total of 7,200 billable hours for the year. All remaining office and administrative costs were estimated at $676,800.
In June, Fogelin signed a contract for a Russian ballet performance. They negotiated a price of $6,400 for their services. When the job was complete, Fogelin's records showed that they had logged 36.5 billable hours.
- What was the amount of gross profit that Fogelin made on the job?

• A) $1,494
• B) $2,969
• C) $925
• D) $4,356

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Definitions:

Competitive Firms

Companies that operate in a market where there are many buyers and sellers, and they have no control over the market price of their product.

Marginal Product

The additional output generated by adding one more unit of a specific input, holding all other inputs constant.

Profit-maximizing

A strategy or approach aimed at achieving the highest possible profit from business operations, often through cost management and optimal pricing.

Competitive Firm

A Competitive Firm is a company that operates in a market where it must set its price equal to the market price due to the presence of many competitors, with no single firm able to influence market conditions.