Question
Pronghorn Contracting Company builds additions and remodels homes. The firm's pricing policy is to estimate the direct costs of the job, allocate overhead as a
Pronghorn Contracting Company builds additions and remodels homes. The firm's pricing policy is to estimate the direct costs of the job, allocate overhead as a percentage of the direct costs, and then add 40% to this as profit. For the next year, direct costs are estimated at $7,579,000and overhead costs are estimated at $11,141,130.
1) Determine the company's overhead allocation rate
2)Calculate the price that will be quoted to a customer for a remodeling job that is expected to have direct materials costs of $27,000and direct labour costs of $16,000?
3)If actual direct costs next year are $6,700,000, what would be the amount of overapplied or underapplied overhead?
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