Jones Consulting a real estate consulting firm specializes i

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

Solution

Predicted cost of White manufacturing Job Direct labor cost 147*220 $32340 Indirect cost 32340*.60 19404 Total predicted cost 51744