Reference no: EM132368971
Question
Fingers, a graphic design service has received an inquiry from a potential customer for a quotation for a web-page design. The pricing policy of the business is based on the budgeted financial data for the coming financial year. The data for the year is:
Sales - $550,000
Direct Materials - 50,000
Direct Labour - 300,000
Variable Overhead - 5,000
Advertising for business - 5,000
Depreciation On equipment - 30,000
Administrarion - 27000
Interest - 10,000
Profit before tax - 133,000
Other info: Management has budgeted for 20,000 direct labor hours. Overhead is applied based on direct layout costs. An estimate for direct costs of job shown below:
Direct Materials $400
Direct Labour (100hours) $1,500
Question:
Total budgeted direct costs for the year are:
Total budgeted indirect costs for the year are:
The budgeted overhead recovery rate based on direct labour hours is:
The recommended quote for the job is:
If the budgeted direct labour hours change to 25,000 hours what will be the revised quote ?