A local engineering firm is bidding on a design project for a new client. The total budgeted direct-labor costs for the firm are $400,000. The total budgeted indirect costs are $600,000. It is estimated that there are 8,000 billable hours in total.Required:What is the budgeted direct-labor cost rate?What is the budgeted indirect-cost rate assuming direct-labor cost is the allocation base?What should be the engineering firm bid on the project if the direct labor hours are estimated at 300 hours?

Budgeted direct-labor cost rate = total budgeted direct-labor costs / estimated billable hours in…

Answered: A local engineering firm is bidding on…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A local engineering firm is bidding on a design project for a new client. The total budgeted direct-labor costs for the firm are $400,000. The total budgeted indirect costs are $600,000. It is estimated that there are 8,000 billable hours in total.

Required:

What is the budgeted direct-labor cost rate?
What is the budgeted indirect-cost rate assuming direct-labor cost is the allocation base?
What should be the engineering firm bid on the project if the direct labor hours are estimated at 300 hours?

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