Chapter 5, Problem 31E

Methods of Estimating Costs: Engineering Estimates

Twain Services offers leadership training for local companies. It employs three levels of seminar leaders, based on experience, education, and management level being targeted: guru, mentor, and helper. When Twain bids on requests for seminars, it estimates the costs using a set of standardized billing rates. It then adds an estimate for travel, supplies, and so on (referred to as out-of-pocket costs). Next it applies a percentage to the total of seminar leader cost and out-of-pocket cost for general and administrative (G&A) expense. The estimates for each of these elements are shown below:

Required

Marcus Foundries has asked Twain for a set of seminars for managers at several levels. The bidding manager at Twain estimates that the work will require 10 guru-hours, 125 mentor-hours, and 150 helper-hours. She estimates out-of-pocket costs to be $25,000. What is the estimated cost of the proposed seminars, based on these estimates?