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Martin Realtors_predetermined indirect cost allocation rate

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Question;Martin Realtors, a;real estate consulting firm, specializes in advising companies on potential new;plant sites. The company uses a job order costing system with a predetermined;indirect cost allocation rate, computed as a percentage of direct labor costs.;At the beginning of;2012, managing partner Andrew Martin prepared the following budget for the year;Direct labor hours;(professionals)....... 19,600 hours;Direct labor costs;(professionals)........ $ 2,450,000;Office rent............................ 370,000;Support staff;salaries.................. 1,282,500;Utilities............................... 430,000;Peters;Manufacturing, Inc., is inviting several consultants to bid for work. Andrew;Martin estimates that this job will require about 240 direct labor hours.;Requirements;1. Compute Martin;Realtors?;(a) Hourly direct;labor cost rate and;(b) Indirect cost;allocation rate.;2. Compute the;predicted cost of the Peters Manufacturing job.;3. If Martin wants;to earn a profit that equals 45% of the job?s cost, how much should he bid for;the Peters Manufacturing job?

 

Paper#37235 | Written in 18-Jul-2015

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