ITE, LLC charges $125/hour for a Resident Engineer (RE) and $75/hour for an Inspector (I). Administrative staff hours are estimated to be 25% of RE and I time and are charged at $45 per hour.
A profit rate of 10% is charged on total labor. If a project is estimated to take 10 weeks, and assuming a 40-hour work week for both the RE and I, what is the estimated marked-up labor cost?

Question

Quizplus · Accepted Answer

If a project is estimated to take 10 weeks for the given staff, the estimated marked-up labor cost is $97,900.
To arrive at this solution, first calculate cost of labor:
RE labor cost: $125/hour x 10 week x 40 hour/week = $50,000
I labor cost: $75/hour x 10 weeks x 40 hour/week = $30,000 
Administrative hours: = (25%) (RE time + I time) = (0.25) (2 x 40 hours/week x 10 weeks) = 200 hours
Administrative labor cost: $45/hour x 200 hours = $9,000
Total labor cost = $50,000 + $30,000 + $9,000 = $89,000
Then, add profit to labor cost:
Profit rate = 10%
Marked-up labor cost = $89,000 x 1.10 = $ 97,900

ITE, LLC Charges $125/hour for a Resident Engineer (RE) and $75/hour