Reference no: EM133092013
Question - The status of Budgeted Income and Expenses for Pink Consulting and Tutorials for 2020 are presented below. The 2016 Projected Income Statement for Consulting & Tutoring Rosa follows:
Consulting & Tutoring Rosa Income Statement For the Projected Year 2020
Revenues
Consulting Fees $120,000
Tutoring Fees 80,000
Total Projected Revenues $200,000
Direct Costs:
Consulting Professional Expenses $70,000
Tutoring Professional Expenses 40,000
Total Direct Cost $110,000
Indirect Costs:
Consulting overhead $30,000
Tutoring overhead 20,000
Total Indirect Cost 50,000
Total Direct & Indirect Costs 160,000
Operating Income $40,000
Consulting and Tutoring Rosa uses a system with two categories of direct costs and two categories of indirect costs, described above. The costs are prorated to the jobs (Jobs) based on the two direct costs individually.
Required -
1. Determine the 2020 indirect cost rates for both business categories.
2. Prepare the order cost system diagram.
Two offers are received. One for consulting identified as Job # 101C and another for tutoring identified as Job # 101T. Information follows:
Job # 101C Consulting Fees Budgeted Rate Per Hours Budgeted Hours
Manager $ 65.00 8 hrs.
Senior $ 40.00 15 hrs.
Staff $ 15.00 30 hrs.
Job # 101T Tutoring Fees Budgeted Rate Per Hours Budgeted Hours
Teacher $ 30.00 15 hrs.
Assistance $ 10.00 15 hrs.
Supervisor $ 25.00 5 hrs.
3. Calculate the budgeted cost for each of the Jobs, separately.
4. If you want to maintain the level of earnings presented in the Income Statement. How much should be the price of the offers individually for each Job?