Homework Answers
Answer = total contract cost = 22700 euros
Explanation:
Step 1: Calculate Predetermined Overhead Rate
The predetermined overhead rate can be calculated as follows:
Predetermined Overhead Rate = Budgeted Overhead/Budgeted Direct Professional Labor*100 = 400000/250000 × 100 = 160%
Step 2: Calculate Total Contract Cost
The total contract cost is calculated as follows:
| Direct material used | 4500 |
| Direct professional labour | 7000 |
| Overhead (7000 × 160%) | 11200 |
| Total Cost to Redecorate/Total Contract Cost | 22700 euros |
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