Martin Realtors_predetermined indirect cost allocation rate

$11.00

Description

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?

Reviews

There are no reviews yet.

Be the first to review “Martin Realtors_predetermined indirect cost allocation rate”

Your email address will not be published. Required fields are marked *