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You have been asked to price out a project for a customer based on a firm-fixed price. Table below shows the numbers that you arrived
You have been asked to price out a project for a customer based on a firm-fixed price. Table below shows the numbers that you arrived at in determining the bid amount for the project that should be submitted. As you know, before a bid is submitted to a potential customer, the bid must be reviewed by a committee of senior managers that can question the validity of the numbers as well as look for "hidden costs that may have been omitted. For each of the situation below, revise your table and re-calculate the final price to be submitted to the customer. 1. Management tells you that during the execution of the project, the customer will want three interface meetings with the customer held at the customer's location. The Travel Group within your company informs you that airfare, ground travel, meals, and lodging are expected to be approximately $1,500 per meeting 2. The Travel Group has also issued a Covid-19 (Corona Virus) safety kit for $1,800 that must be carried on every trip. 3. One of the executive comments, "The shipping costs for the deliverables, including insurance, packaging, and handling will be about $800. I do not see this included in your summary." The RPF for the project stated that the contract would be firm-fixed price with a lump-sum payment at the end of the project after approval/acceptance of the final deliverables. The cost of capital is expected to be approximately $6,000. 5. The executives believe that a management reserve of 10% should be included in the summary costs. State your assumptions, if any, and complete the Revised Amount column accounting for all the amounts. Item # Category | Type of cost Revised Amount Direct Labor Engineering Manufacturing Subcontractors Consultants Original Amount $88,200 $52,500 $10,000 $2,000 Indirect Labor Total Labor 10% of Total Labor $152,700 $15,270 Corporate G&A Total Cost $167,970 Target Profit 20% of Total Cost $33,594 Bid Amount $201,564
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