A local engineering firm is bidding on a design project for a new client.The total budgeted direct-labour costs for the firm are $800 000.The total budgeted indirect costs are $1 200 000.It is estimated that there are 16 000 billable hours in total.
Required:
a.What is the budgeted direct-labour cost rate?
b.What is the budgeted indirect-cost rate assuming direct-labour cost is the allocation base?
c.If the firm has a 20% mark-up percentage,what should it bid on the project if the direct labour hours are estimated at 500 hours?
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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-labour costs for the firm are $800 000.The total budgeted indirect costs are $1 200 000.It is estimated that there are 16 000 billable hours in total.
Required:
a.What is the budgeted direct-labour cost rate?
b.What is the budgeted indirect-cost rate assuming direct-labour cost is the allocation base?
c.If the firm has a 20% mark-up percentage,what should it bid on the project if the direct labour hours are estimated at 500 hours?
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A Local Engineering Firm Is Bidding on a Design Project