Jones Consulting, a real estate consulting firm, specializes in advising compani
ID: 2604927 • Letter: J
Question
Jones Consulting, a real estate consulting firm, specializes in advising companies on potential new plant sites. The firm uses a job cost system with a predetermined indirect cost allocation rate computed as a percentage of expected direct labor costs. At the beginning of the year, managing partner
EvanEvan
JonesJones
prepared the following plan, or budget, for the year:
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(Click the icon to view the prepared budget.)Read the requirements
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.Requirement 1 a. Compute
JonesJones
Consulting's hourly direct labor cost rate. (Round your answer to the nearest whole dollar.)
Direct labor costs
/
Direct labor hours
=
Direct labor rate
$2,350,000
/
16,000
=
$147
/hour
Requirement 1 b. Compute
JonesJones
Consulting's indirect cost allocation rate. (Round your answer to the nearest whole number.)
Total indirect costs
/
Direct labor costs
=
Predetermined indirect cost allocation rate
1,420,000
/
2,350,000
=
60
%
Requirement 2. Compute the predicted cost of the
Requirement 2. Compute the predicted cost of the
WhiteWhite
Resources job.
Enter the direct labor and the indirect costs for the
WhiteWhite
Resources, then calculate the total predicted cost for the job. (Enter percentage amount as a whole number. Round interim calculations and final answers to the nearest whole dollar.)
Jones Consulting
Estimated Cost of the White Manufacturing Job
Direct labor
hr. x
Indirect costs
60
% x
Total Predicted Cost
DATA TABLE
Direct labor hours (professionals). . . . .
16,000 hours
Direct labor costs (professionals). . . . .
$2,350,000
Office rent. . . . . . . . . . . . . . . . . . . . . . . . .
$200,000
Support staff salaries. . . . . . . . . . . . . . . .
$930,000
Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . .
$290,000
WhiteWhite
Resources is inviting several consulting firms to bid for work.
JonesJones
estimates that this job will require about
220220
direct labor hours.
Direct labor costs
/
Direct labor hours
=
Direct labor rate
$2,350,000
/
16,000
=
$147
/hour
Explanation / Answer
Predicted cost of White manufacturing Job Direct labor cost 147*220 $32340 Indirect cost 32340*.60 19404 Total predicted cost 51744
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