Exercise 5-29 Methods of Estimating Costs: Engineering Estimates (LO 5-2)

Twain Services offers leadership training for local companies. It employs three levels of seminar leaders, based on experience, education, and management level being targeted: guru, mentor, and helper. When Twain bids on requests for seminars, it estimates the costs using a set of standardized billing rates. It then adds an estimate for travel, supplies, and so on (referred to as out-of-pocket costs). Next it applies a percentage to the total of seminar leader cost and out-of-pocket cost for general and administrative (G&A) expense. The estimates for each of these elements are shown below:

Guru cost (per hour)	$	950
Mentor cost (per hour)	$	650
Helper cost (per hour)	$	90
G&A factor		180	%

Required:

Marcus Foundries has asked Twain for a set of seminars for managers at several levels. The bidding manager at Twain estimates that the work will require 50 guru-hours, 185 mentor-hours, and 650 helper-hours. She estimates out-of-pocket costs to be $36,000. What is the estimated cost of the proposed seminars, based on these estimates?