As Richard prepares the budget for his company's sprinkler installation service, he uses DL hours as the allocation base for both variable-MOH and fixed-MOH, since the work is labor-intensive. For a standard-sized residence, the work could be done in 6 hours. If the employees really push it, he believes they could get it done in 5.7 hours. Assume standard DL is $21 per hour, while variable-MOH and fixed-MOH costs are estimated to be $6 per hour and $9 per hour, respectively. How much total cost would be saved by his optimistic estimate versus a more practical estimate?
