Question

Peters Realtors, a real estate consulting firm, specializes in advising companies on potential new plant sites. The company uses a job order costing system with a predetermined overhead allocation rate, computed as a percentage of direct labor costs. At the beginning of 2018, managing partner Lee Peters prepared the following budget for the year: (Click the icon to view the prepared budget.) (Click the icon to view additional information.) Read the requirements. Requirement 1. Compute Peters Realtors' (a) hourly direct labor cost rate and (b) predetermined overhead allocation rate. i Data Table Begin with (a) hourly direct labor cost rate. Direct labor cost rate per hour = $ Direct labor hours (professionals) Direct labor costs (professionals) Office rent Support staff salaries 25,000 hours 2,500,000 310,000 1,270,000 420,000 Utilities Requirements Print Done 1. Compute Peters Realtors' (a) hourly direct labor cost rate and (b) predetermined overhead allocation rate. 2. Compute the predicted cost of the Martinez Manufacturing job. 3. If Peters wants to earn a profit that equals 50% of the job's cost, how much should he bid for the Martinez Manufacturing job? A More Info Print Done Martinez Manufacturing, Inc. is inviting several consultants to bid for work. Lee Peters wants to submit a bid. He estimates that this job will require about 250 direct labor hours. Print Done Choose from any list or enter any number in the input fields and then click Check Answer.

Answer 1

Part-1

Computation of Hourly Direct Labour Cost Rate
Direct Labour Cost	$2,500,000.00
Direct Labour Hour	25000
Hourly direct Labour Cost	$100.00
Computation of predetermined Overhead ALlocation Rate
Direct Labour Cost	$2,500,000
Overhead ( 310000+1270000+420000)	$2,000,000
Overhead - % of Direct Labour cost	80%

Computation of Predicted cost of MmJob
Professional ( Labour) Cost ( 250X 100)	$25,000.00
Allocated Overhead on Job ( 25000*80%)	$20,000.00
Total Cost of Job	$45,000.00

Part-3
Computation of BID
Professional ( Labour) Cost ( 250X 100)	$25,000.00
Allocated Overhead on Job ( 25000*80%)	$20,000.00
Total Cost of Job	$45,000.00
Add: 50% of cost of Job	$22,500.00
Total Bid price	$67,500.00