Abba Accounting expects its accountants to work a total of 24,000 direct labor hours per year. Abba's estimated total indirect costs are $240,000. The direct labor rate is $75 per hour. If Abba does a job requiring 40 hours of direct labor, and bills the client using a standard markup of 40%, what will be the amount that Abba bills the client for?

Question

Quizplus · Accepted Answer

Calculations:
$240,000 / 24,000 = $10
$10 × 40 = $400
$75 × 40 = $3,000
$400 + $3,000 = $3,400
$3,400 × 140% = $4,760

Abba Accounting Expects Its Accountants to Work a Total of 24,000