Peacock Inc. is a contracting business that creates one-of-a-kind murals for each individual client. They have been asked by a potential client to prepare an estimate for the creation of a floral mural for the client's office waiting room. Turner, the main artist for Peacock would like the company to consider updating its billing methods from a flat rate of $370.00 per painting hour to an activity-based costing method that would include a markup of 29%. After visiting the client's proposed site, Turner has put together the following estimate for the floral mural:
What is the final bid price that Peacock will present to the client as per new estimated rates?
A) $24,884.75
B) $31,820.00
C) $32,101.33
D) $41,047.80

Question

Peacock Inc. is a contracting business that creates one-of-a-kind murals for each individual client. They have been asked by a potential client to prepare an estimate for the creation of a floral mural for the client's office waiting room. Turner, the main artist for Peacock would like the company to consider updating its billing methods from a flat rate of $370.00 per painting hour to an activity-based costing method that would include a markup of 29%. After visiting the client's proposed site, Turner has put together the following estimate for the floral mural:
 What is the final bid price that Peacock will present to the client as per new estimated rates?
A) $24,884.75 
B) $31,820.00 
C) $32,101.33 
D) $41,047.80

Quizplus · Accepted Answer

Determine the total cost for each activity as follows: Design, $150/hour × 3 hours = $450.00; Wall Prep, $3.65/square foot × 215 square feet = $784.75; and Painting, $275/hour × 86 hours = $23,650.00. The total cost of all activities can be found by summing the individual totals: $450.00 + $784.75 + $23,650.00 = $24,884.75. Lastly, add the markup- $24,884.75 × 1.29 = $32,101.33 final bid price (Choice C).