Accounting Consultants firm is preparing to bid for a consulting job. Although a partner Alicia Martin will use her judgment about the market in finalizing the bid, she has asked you to prepare a cost analysis to help in the bidding. You have estimated the costs for the consulting job to be: 

 

Materials and supplies, at cost                                                                       $ 30,000

Hourly pay for consultants, 2,000 hours @ $35 per hour                                  70,000

Fringe benefits for consultants, 2,000 hours @ $12 per hour                             24,000

Total variable costs                                                                                           124,000

Fixed costs allocated to the job

Based on labor, 2,000 hours @ $10 per hour                                                    20,000

Based on materials and supplies, 80% of 30,000                                               24,000

Total cost                                                                                                        $168,000

 

Of the $44,000 allocated fixed costs, $35,000 will be incurred even if the job is not undertaken. Alicia normally bids jobs at the sum of 150% of the estimated materials and supplies cost and $75 per estimated labor hour.

Prepare a bid (price) that will cover full costs plus a markup for profit equal to 20% of full cost. 

Answer rating: 100% (QA)

Solution Total variable cost124000 Variable cost allocated to job Hourly pay for consultants ... View the full answer