Question

Consider the following budgeted data for the client case of Skysong's accounting firm. The client wants a fixed-price quotation. Direct professional labour $ 21,000 Direct support labour 10,600 Fringe benefits for direct labour 12,200 Photocopying 2,100 Telephone calls 2,000 Computer lines 5,500 Overhead is allocated at the rate of 100% of direct labour cost. Prepare a schedule of the budgeted total costs for the client. Show subtotals for total direct labour costs and total costs as a basis for mark-up. Professional labour 21000 Support labour 10600 Allocated overhead v Other direct costs Assume that the partners' policy is to quote a fixed fee at 10% above the total costs. What fee would be quoted? Quoted fee

Answer 1

Answer
A.
Direct labour costs:
Professional labour	$      21,000
Support labour	$      10,600
Total	$      31,600
Other direct costs (Fringe benefits + copying + phone) (12200+2100+2000)	$      16,300
Allocated overhead 31,600 (100% of $ 31,600)	$      31,600
Budgeted costs   (31600+16300+31600)	$      79,500
This assumes that computer line costs cannot be traced to specific jobs.
B.
Fee = 110% * $79,500 = $87,450