Consider the following budgeted data for a client job of Bob Crachit’s accounting firm. The client wants a fixed price quotation.

Direct professional labor .........$20,000

Direct support labor .......... 10,000

Fringe benefits for direct labor ...... 13,000

Photocopying ............ 2,000

Telephone calls ............ 2,000

Computer equipment ......... 6,000

Overhead is allocated at the rate of 100% of direct labor cost.

REQUIRED

A. Prepare a schedule of the budgeted total costs for the client. Show subtotals for total direct labor costs and total costs as a basis for markup.

B. Assume that the partner’s policy is to quote a fixed fee at 10% above the total costs. What fee would be quoted?

C. Explain why the listed estimates for costs might not be similar to the actual costs for the job. What factors could affect the accuracy of these estimates? List as many factors as you can.