Problem 3-37

Contemporary Trends is an interior decorating firm in Munich. The following costs were incurred in the firms contract to redecorate the mayors offices.

Direct material used ...................................................................................................................................... 4,100

Direct professional labor ................................................................................................................................ 7,000

The firms budget for the year included the following estimates:

Budgeted overhead .................................................................................................................................... 510,000

Budgeted direct professional labor .............................................................................................................. 300,000

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 firms contract to redecorate the mayors offices. (Remember to express your answer in terms of euros. On the day this exercise was written the euro was valued at 1.2905 U.S. dollars.)