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?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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.

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