If Chance Consulting wants to earn a profit that equals 35% of the job’s cost, how much should the company bid for the Juda Resources job?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Chance Consulting, a consulting firm, specializes in advising companies on creating business plans. Chance Consulting uses a
At the beginning of the year, managing partner Sarah Chance prepared the following plan, or budget, for the year:
|
Direct labor hours (professionals) |
19,000 hours |
|
Direct labor costs (professionals) |
$2,650,000 |
|
Office rent |
$260,000 |
|
Support Staff Salaries |
$870,000 |
|
Utilities |
$340,000 |
Juda Resources is inviting several consulting firms to bid for work. Chance estimates that this job will require about 220 direct labor hours.
- Compute Chance Consulting’s hourly direct labor cost rate and their indirect cost allocation rate
- What is the estimate cost for the Juda Resources Consulting Contract?
- If Chance Consulting wants to earn a profit that equals 35% of the job’s cost, how much should the company bid for the Juda Resources job?
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