Ruby Corp Is Bidding on a Design Project for a New

question 166

Essay

Ruby Corp 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 $800,000.It is estimated that there are 10,000 billable hours in total.
Required:
a.What is the budgeted direct-labor cost rate?
b.What is the budgeted indirect-cost rate assuming direct-labor cost is the allocation base?
c.What should be the engineering firm bid on the project if the direct labor hours are estimated at 300 hours?

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Definitions:

Cost Reconciliation Report

A financial report used to compare and reconcile the estimated costs to the actual costs incurred for a specific project or during a particular period.

Weighted-Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all units available for sale.

Percentage Completion

An accounting method used to recognize revenue and expenses in long-term projects, based on the project's degree of completion.

Weighted-Average Process Costing System

A costing methodology that averages the costs of different production batches over a period to calculate the cost per unit.