A local engineering firm is bidding on a design project for a new client. The total budgeted direct-labor costs for the firm are $400,000. The total budgeted indirect costs are $600,000. It is estimated that there are 8,000 billable hours in total.
Required:
a.What is the budgeted direct-labor cost rate?
b.What is the budgeted indirect-cost rate assuming direct-labor cost is the allocation base?
c.What should be the engineering firm bid on the project if the direct labor hours are estimated at 300 hours?

Question

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The Answer of A local engineering firm is bidding on a design project for a new client. The total budgeted direct-labor costs for the firm are $400,000. The total budgeted indirect costs are $600,000. It is estimated that there are 8,000 billable hours in total.
Required:
a.What is the budgeted direct-labor cost rate?
b.What is the budgeted indirect-cost rate assuming direct-labor cost is the allocation base?
c.What should be the engineering firm bid on the project if the direct labor hours are estimated at 300 hours?

A Local Engineering Firm Is Bidding on a Design Project