Assignment 2 questions

4-23 Job costing, consulting firm. (LO 2) Frontier Partners, a management consulting firm, has the following condensed budget for the year:

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

1. Prepare an overview diagram of the job-costing system. Calculate the budgeted indirect-cost rate for Frontier Partners for the year.
2. The markup rate for pricing jobs is intended to produce operating income equal to 10% of revenues. Calculate the markup rate as a percentage of professional labour costs.
3. Frontier is bidding on a consulting job for Sentinel Communications, a wireless communications company. The budgeted breakdown of professional labour on the job is as follows:

Calculate the budgeted cost of the Sentinel Communications job. How much will Frontier bid for the job if it is to earn its target operating income of 10% of revenues?

Check Figure: Total budgeted costs are $35,550

\begin{tabular}{ccc} Professional Labour Category & Budgeted Rate per Hour & Budgeted Hours \\ \hline Director & $200 & 9 \\ Partner & 100 & 24 \\ Associate & 50 & 100 \\ Assistant & 30 & 220 \end{tabular}