Curtis owns Mayflower Construction, a company that specializes in the design and construction of what they have promoted as a backyard oasis. Curtis is putting together an informational packet to distribute to potential clients that will include examples of projects and suggested pricing. The first project in the packet will be backyard oasis consisting of a large pergola and seating. Curtis would like to upgrade Mayflower's costing to be in line with Activity-Based Costing (ABC) and has put together the following information about the first example project:
Curtis would like to add a 21% markup to the total cost of the project. This would be a big transition from his current method of billing at a flat rate of $198 per linear square foot. How much is final price that Curtis will include in the packet?

Question

Curtis owns Mayflower Construction, a company that specializes in the design and construction of what they have promoted as a backyard oasis. Curtis is putting together an informational packet to distribute to potential clients that will include examples of projects and suggested pricing. The first project in the packet will be backyard oasis consisting of a large pergola and seating. Curtis would like to upgrade Mayflower's costing to be in line with Activity-Based Costing (ABC) and has put together the following information about the first example project:
 Curtis would like to add a 21% markup to the total cost of the project. This would be a big transition from his current method of billing at a flat rate of $198 per linear square foot. How much is final price that Curtis will include in the packet?

Quizplus · Accepted Answer

Determine the total cost for each activity as follows: Pergola Construction, $125/linear foot × 40 linear feet = $5,000.00; Design, $142.00/hour × 5 hours = $710.00; Furniture Construction, $90/piece × 8 pieces = $720.00. The total cost of all activities can be found by summing the individual totals: $5,000.00 + $710.00 + $720.00 = $6,430.00. Next, add the markup: $6,430.00 × 1.21 = $7,780.30, and this is the final bid price (Choice C).

Curtis Owns Mayflower Construction, a Company That Specializes in the Design