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Question - C Associates is an architectural firm that has been in practice only a few years. Because it is a relatively new firm, the market for the firm's services is very competitive. To compete successfully, C must deliver quality services at a low cost. C presents the following data for 2016 and 2017.
2016
2017
No of jobs billed
30
50
Architect labor-hours
24,000
27,000
Cost per architect labor hour
$35
$36
Architect support capacity (number of jobs the firm can do)
60
Total cost of software-implementation support
$168,000
$180,000
Total selling and customer service costs
$1,000,000
$940,500
Architect labor-hour costs are variable costs. Architect support costs for each year depend on the Architect support capacity that C chooses to maintain each year (that is, the number of jobs it can do each year). Architect support costs do not vary with the actual number of jobs done that year.
What the cost of unused architectural support capacity at the beginning of 2017, based on the number of jobs actually done in 2017?
a. Cannot be determined from the data given
b. $60,000
c. $0
d. $30,000
e. $90,000
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