Design Arts Associates is an interior decorating firm in Berlin. The following costs were incurred in the
Question:
Design Arts Associates is an interior decorating firm in Berlin. The following costs were incurred in the firm’s contract to redecorate the mayor’s offices.
Direct material used .....................................3,500 euros
Direct professional labor ..............................6,000 euros
The firm’s budget for the year included the following estimates:
Budgeted overhead ..................................400000 euros
Budgeted direct professional labor .......250,000 euros
Overhead is applied to contracts using a predetermined overhead rate calculated annually. The rate is based on direct professional labor cost.
Required: Calculate the total cost of the firm’s contract to redecorate the mayor’s offices.
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