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Compute markup rate for pricing jobs is intended to produce

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Reference no: EM132791503

Nuisance Begins Pvt Ltd - A consulting firm uses a job costing system at its Bengaluru office. It has the following condensed budget for Year 1.

Nuisance Begins Pvt Ltd

Revenues                                    10,00,00,000
Direct costs - Professional Labor        2,50,00,000
Indirect costs - Client Support           6,50,00,000
Total costs                                        9,00,00,000
Operating Income                                 1,00,00,000

Nuisance Begins Pvt Ltd has a single direct cost category (professional labor) and single indirect cost pool (client support). Indirect costs are allocated to jobs on the basis of direct professional labor costs.

Problem 1: Compute the below:

a. Year 1 budgeted indirect cost rate of Nuisance Begins Pvt Ltd

b. The markup rate for pricing jobs is intended to produce operating income equal to 10% of revenues. Compute the markup rate as a % of professional labor costs

Reference no: EM132791503

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