RJB Building Routinely Bids on Construction Jobs

question 59

Multiple Choice

RJB Building routinely bids on construction jobs. The company first determines the budgeted product cost of the job and then applies a markup of 45%. If a bid of $20,000 is submitted for a new job, which of the following statements applies?

• A) The budgeted product cost is $20,000.
• B) All costs pertaining to the job total $20,000.
• C) $6,207 includes selling and administrative expense and profit.
• D) $6,207 includes fixed overhead, selling and administrative expense, and profit.

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Definitions:

Activity Variances

The differences between planned or expected levels of activity (and associated costs) and actual outcomes, often used for performance evaluation and control.

Students

Individuals engaged in learning at educational institutions, ranging from schools to universities, but not a key term related to accounting or finance directly.

Cost Drivers

Factors that cause a change in the cost of an activity, such as machine-hours, labor-hours, or quantity of materials.

Activity Variances

Differences between planned and actual costs arising from changes in activity levels in various cost centers within a business.