MJA Engineers is a firm of consulting engineers. The business provides two main services: design and support
Question:
MJA's tender manager is responsible for preparing tender bids. She estimates tender costs by identifying all costs that are likely to be directly associated with the project. To obtain the final tender bid, the total professional (engineering and scientist) labour costs are marked up by 75 per cent, and all other costs are marked up by 50 per cent. These margins are intended to cover any indirect costs plus provide the required profit margin on the project.
The tender manager estimated the following direct costs for the airport project:
Required:
1. Estimate the tender bid for the project.
2. Estimate the profit on the project if the bid is successful and all costs are incurred as planned.
3. Once a project has begun, MJA will use a costing system that tracks all direct costs to projects. If the airport bid is successful, how would managers at MJA use this information?
4. Do you think there is likely to be any link between the costing system used to account for existing projects and the system that the tender manager uses to prepare bids for potential projects? Explain.
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Related Book For
Management Accounting
ISBN: 9781760421144
7th Edition
Authors: Kim Langfield Smith, Helen Thorne, David Alan Smith, Ronald W. Hilton
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