Job costing, consulting firm. Taylor & Associates, a consulting firm, has the following condensed budget for 2009:

Taylor has a single direct-cost category (professional labor) and a single indirect-cost pool (client support). Indirect costs are allocated to jobs on the basis of professional labor costs.

1. Prepare an overview diagram of the job-costing system. Compute the 2009 budgeted indirect-cost rate for Taylor & Associates.

2. The markup rate for pricing jobs is intended to produce operating income equal to 10% of revenues. Compute the markup rate as a percentage of professional labor costs.

3. Taylor is bidding on a consulting job for Red Rooster, a fast-food chain specializing in poultry meats. The budgeted breakdown of professional labor on the job is as follows:

Compute the budgeted cost of the Red Rooster job. How much will Taylor bid for the job if it is to earn its target operating income of 10% of revenues?

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Revenues Total costs: Direct costs Professional Labor Indirect costs Client support Operating income $20,000,000 $ 5,000,000 13,000,000 18,000,000