Question

Exercise 5.23 Consider the following budgeted data for the client case of Stellar's accounting firm. The client wants a fixed-price quotation. Direct professional labour $ 18,600 Direct support labour 10,300 Fringe benefits for direct labour 12,900 Photocopying 2,100 Telephone calls 2,200 Computer lines 5,600 Overhead is allocated at the rate of 100% of direct labour cost. Your answer is partially correct. Try again. 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. Budgeted costs Professional labour ✓ 18600 Support labour 10300 Direct labour costs 12900 Allocated overhead 4300 Other direct costs 5600 Total 51700 x Your answer is incorrect. Try again. Assume that the partners' policy is to quote a fixed fee at 10% above the total costs. What fee would be quoted? Quoted fee 56870

Answer 1

ANSWER

A.

Direct labour costs:

Professional labour $18,600

Support labour 10,300

Total 28,900

Other direct costs 17,200 (Fringe benefits + copying + phone)

Allocated overhead 28,900 (100% of $28,900)

Budgeted costs $75,000

This assumes that computer line costs cannot be traced to specific jobs.

B.

Fee = 110% * $75,000 = $82,500

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