(L. OBJ. 5) Job order costing in a service company [15-20 min] Simms Realtors, a real e...

(L. OBJ. 5) Job order costing in a service company [15-20 min]

Simms 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 indirect cost allocation rate, computed as a percentage of direct labor costs. At the beginning of 2011, managing partner Debra Simms prepared the following budget for the year:

Maynard Manufacturing, Inc., is inviting several consultants to bid for work. Debra Simms estimates that this job will require about 260 direct labor hours.

Requirements

1. Compute Simms Realtors’ (a) hourly direct labor cost rate and (b) indirect cost allocation rate.

2. Compute the predicted cost of the Maynard Manufacturing job.

3. If Simms wants to earn a profit that equals 55% of the job's cost, how much should she bid for the Maynard Manufacturing job?