CASE DATA marks-up total direct cost using the 10+ 10 rule. The management At the present time, American feels that overhead costs are insignificant during the estimating phase when pricing new constraction projects and that the rule adequately marks-up time and material work. Tho management team questions this policy. In light of last ycar's loss and the expected decrease in sales for the budget period, the management team wants to tighten up" the cost estimating process to make it as accurate as possible. The following budget for the company and for each profit center is found in Table 7.6. Table 7.6 Company and profit center budgets CR 1.360.000 1600 535 500 9 00 527 000 24 80 297 500 3.145,000 37 00 2 059 975 34 62 Labor Material Su Other Direct Cost (JOH 0.00 00.00 0 0.00 0 0.00 170,000 2.00 7 7.225,000 85.00 5.315 475 89.34 1.612.025 75.86 297-500 70.00 Total Direct Cost Gross Profit 0 634,525 10 66 512975 2414 127 1,275,000 15.0 Variable rat 127.500 1.50 30 600 7 20 Auto and Truck Communications Insurance (Work Interest (Work Other Variable Ex 060 85,000 1.00 201450 2.37 1 102000.1 28.560 35 1.05 18 965 7 3,500 4.74 850 0.20 67,335 15.84 11,900 0.20 Total Variable Expense rating Expense 481950 5.67 210390 354 204 225 481.9501 5.67| 210.390| 354 204.225 1.313 Contributions Depreciation (Auto and Truck Depreciation (Buildin Insurance (Auto and Truck Interest (Auto and Truck) Rent 6,000 0.07 2000 085 3,000 0.04 34,000 0.40 14 4001 O 24 40 375 0.09 8,160 1.92 0 04 19.040 11.200 4,000 0.07 4600108 17.250 4.06 600 0.14 54,378 12.79 121,713 28.64 1.36 054 22 893 0 18 014 3.000 538,000 6.33 302,605 5.09 181,017 12,000 0.14 .400 0.14 Other Fixed Expense 5 Total Fixed Expense Total Operating Expense 5,788 Net Profit (before tax) 255,050 3.00 121530 2.04 127 733