What is the total cost if a job experiences a change leading to a reduction of $1,200 in labor and $240 in overhead costs?

What is the total cost if a job experiences a change leading to a reduction of $1,200 in labor and $240 in overhead costs?

• A. $3,700
• B. $3,371
• C. $4,500
• D. $3,950

Answer: (B)

To determine the total cost after experiencing a reduction in labor and overhead costs, you start with the current total cost before these reductions. The question indicates there are reductions of $1,200 in labor and $240 in overhead. You sum these reductions first, which gives you a total reduction of $1,440 ($1,200 + $240). If the pre-change total cost were a specific amount, subtracting this reduction from that total would give the new total cost. When the new cost of $3,371 is calculated, it implies that this figure is what remains after applying the reductions to the initial total cost. Therefore, if the original cost was $4,811 ($3,371 + $1,440), this total aligns correctly with the given answer. This understanding helps clarify that the total cost after accounting for these deductions yields the final figure of $3,371. Thus, the rationale behind this choice lies in recognizing how reductions in costs directly impact the overall budget for the job, leading to the appropriate adjusted total.

To determine the total cost after experiencing a reduction in labor and overhead costs, you start with the current total cost before these reductions. The question indicates there are reductions of $1,200 in labor and $240 in overhead.

You sum these reductions first, which gives you a total reduction of $1,440 ($1,200 + $240). If the pre-change total cost were a specific amount, subtracting this reduction from that total would give the new total cost.

When the new cost of $3,371 is calculated, it implies that this figure is what remains after applying the reductions to the initial total cost. Therefore, if the original cost was $4,811 ($3,371 + $1,440), this total aligns correctly with the given answer.

This understanding helps clarify that the total cost after accounting for these deductions yields the final figure of $3,371. Thus, the rationale behind this choice lies in recognizing how reductions in costs directly impact the overall budget for the job, leading to the appropriate adjusted total.