Assume Samsung and Apple are bidding on a large device support service job for a U.S.-based business. Samsung estimates direct labor for this service job to include 800 phone support hours and 1,200 technical specialist hours. Samsung pays phone support staff $11 per hour and technical specialists $22 per hour. Overhead is applied using a rate of $24 per direct labor hour (for both types of labor).
Required
1. For Samsung, what is this job’s estimated total cost?
2. Samsung believes that the customer will choose the company that offers the lower price. If Samsung applies a markup of 30% on total cost, will its quoted price be lower than Apple’s expected quoted price of $105,000?
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