Question
onsulting, a real estate consulting firm, specializes in advising companies on potential new plant sites. The firm uses a job cost system with a predetermined
onsulting, a real estate consulting firm, specializes in advising companies on potential new plant sites. The firm uses a job cost system with a predetermined indirect cost allocation rate computed as a percentage of expected direct labor costs. At the beginning of the year, managing partner
EvanEvan
JonesJones
prepared the following plan, or budget, for the year:
LOADING...
(Click the icon to view the prepared budget.)Read the requirements
LOADING...
.Requirement 1 a. Compute
JonesJones
Consulting's hourly direct labor cost rate. (Round your answer to the nearest whole dollar.)
Direct labor costs | / | Direct labor hours | = | Direct labor rate | ||
$2,350,000 | / | 16,000 | = | $147 | /hour |
Requirement 1 b. Compute
JonesJones
Consulting's indirect cost allocation rate. (Round your answer to the nearest whole number.)
Total indirect costs | / | Direct labor costs | = | Predetermined indirect cost allocation rate | ||
1,420,000 | / | 2,350,000 | = | 60 | % |
Requirement 2. Compute the predicted cost of the
WhiteWhite
Resources job.Enter the direct labor and the indirect costs for the
WhiteWhite
Resources, then calculate the total predicted cost for the job. (Enter percentage amount as a whole number. Round interim calculations and final answers to the nearest whole dollar.)
Jones Consulting | |||||
Estimated Cost of the White Manufacturing Job | |||||
Direct labor | 220 | hr. x | $147 | $32,340 | |
Indirect costs | 60 | % x | $32,340 | 19,404 | |
Total Predicted Cost | $51,744 |
Requirement 3. If
JonesJones
Consulting wants to earn a profit that equals
35%
of the job's cost, how much should the company bid for the
WhiteWhite
Resources job? (Round your answers to the nearest whole dollar.)
Required service revenue: |
| Clear All | Check Answer |
Data Table
Direct labor hours (professionals). . . . . | 16,000 hours |
Direct labor costs (professionals). . . . . | $2,350,000 |
Office rent. . . . . . . . . . . . . . . . . . . . . . . . . | $200,000 |
Support staff salaries. . . . . . . . . . . . . . . . | $930,000 |
Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . | $290,000 |
WhiteWhite
Resources is inviting several consulting firms to bid for work.
JonesJones
estimates that this job will require about
220220
direct labor hours.
Requirement 2. Compute the predicted cost of the
WhiteWhite
Resources job.
Enter the direct labor and the indirect costs for the
WhiteWhite
Resources, then calculate the total predicted cost for the job. (Enter percentage amount as a whole number. Round interim calculations and final answers to the nearest whole dollar.)
Jones Consulting | |||||
Estimated Cost of the White Manufacturing Job | |||||
Direct labor | 220 | hr. x | $147 | $32,340 | |
Indirect costs | 60 | % x | $32,340 | 19,404 | |
Total Predicted Cost | $51,744 |
Requirement 3. If JonesJones
Consulting wants to earn a profit that equals
35%
of the job's cost, how much should the company bid for the
White Resources job? (Round your answers to the nearest whole dollar.)
Required service revenue: |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started