Kim and Tim Landry are painting contractors. For an upcoming job, Kim and Tim estimate that they need $250 worth of paint. In addition, they expect to spend 45 person-hours on the job. Kim and Tim pay their workers $12 per hour (including all benefits). They also expect to use several brushes, scaffolding, and other ancillary items, although it is difficult to estimate this use exactly. Finally, Kim and Tim estimate that they will spend four hours in preparing the bid; this includes driving to the customer’s home to evaluate the work required and going to the store to buy paint. Kim and Tim price their time at $20 per hour. In preparing bids, Kim and Tim mark up the total cost of materials and labor (including their labor) by 40% to cover administrative overhead and profit.
Required:
a. Determine Kim and Tim’s bid for this job.
b. How would the cost sheet change if Kim and Tim’s explicitly allocated overhead to jobs? Assume that Tim and Kim apply overhead at the rate of 20% of materials cost and 50% of direct labor cost.