Pluto Travel Services provided the following information:
Direct labor rate: $45 per hour
Predetermined overhead allocation rate for indirect costs: $24 per direct labor hour
Pluto is negotiating a job with a new client.The job will require 10 hours of direct labor.If Pluto wishes to have at least a 15% gross profit on the revenues,it needs to earn $716 of revenues.

Question

Quizplus · Accepted Answer

Costs:
 11ea8870_35fa_6bfa_bb89_dbd7724c0507_TB5025_00 Revenues - Total Costs = Gross Profit
If Revenues = X then,
X - $690 = 0.15X
Or, 0.85X = $690
Therefore, X = 811.76

Pluto Travel Services Provided the Following Information