Taylor & Associates, a consulting firm, has the following condensed budget for 2012:
Revenues ................... $ 20,000,000
Total costs:
Direct costs Professional labor......... $ 5,000,000
Indirect costs
Client support..... 13,000,000 ......... 18,000,000
Operating income ............... $ 2,000,000
Taylor has a single direct- cost category (professional labor) and a single indirect- cost pool (client support). Indirect costs are allocated to jobs on the basis of professional labor costs.
1. Prepare an overview diagram of the job- costing system. Calculate the 2012 budgeted indirect- cost rate for Taylor & Associates.
2. The markup rate for pricing jobs is intended to produce operating income equal to 10% of revenues. Calculate the markup rate as a percentage of professional labor costs.
3. Taylor is bidding on a consulting job for Tasty Chicken, a fast- food chain specializing in poultry meats. The budgeted breakdown of professional labor on the job is as follows:

Calculate the budgeted cost of the Tasty Chicken job. How much will Taylor bid for the job if it is to earn its target operating income of 10% ofrevenues?

  • CreatedJanuary 15, 2015
  • Files Included
Post your question