Question

(10 points) Chapter 8 Consulting firm, quotations A consulting firm has just prepared a quotation for a client on a special project. The cost breakdown identifies a number of direct cost items with all other costs regarded as overheads. Overhead costs are recovered at 60% of total direct costs. Direct cost quoted: Professional salaries Secretarial support Labour-related costs Photocopying Telephone/fax Computer time 45 000 13 500 19 500 500 1 500 9 000 Required Calculate the amount of the fee quotation if the mark-up on services is 25% on the total cost (direct and overheads). Please writes the answer in the text box and submit your detail work in Excel.

Answer 1

Calculation of fee quotation on services
Fee quotation	Total cost + Mark-up
Fee quotation	Total cost + (0.25*Total cost)
Calculation of total costs
Professional salaries	$45,000
Secretarial support	$13,500
Labor related costs	$19,500
Photocopying	$1,500
Telephone/Fax	$1,500
Computer time	$9,000
Total direct costs	$90,000
Overhead costs	$54,000	(90000*60%)
Total costs	$144,000
Fee quotation	144000+(0.25*144000)
Fee quotation	144000+36000
Fee quotation	$180,000
Thus, fee quotation should be $180,000.