Aminta Accounting expects its accountants to work a total of 42,000 direct labour hours per year.Aminta's estimated total indirect costs are $336,000.The direct labour rate is $110 per hour.Direct labour hours is the allocation base for indirect costs.If Aminta does a job requiring 60 hours of direct labour and bills the client using a standard markup of 40%,calculate the amount of the client's bill.

Question

Quizplus · Accepted Answer

The client's bill is calculated by adding the direct labor cost, the allocated indirect cost, and the markup. Direct labor cost is 60 hours * $110/hour = $6600. Indirect cost per hour is $336,000 / 42,000 hours = $8/hour. Total indirect cost for the job is 60 hours * $8/hour = $480. Total cost before markup is $6600 + $480 = $7080. With a 40% markup, the client's bill is $7080 * 1.40 = $9912.

Aminta Accounting Expects Its Accountants to Work a Total of 42,000