Question

Baptiste Accounting Services expects its accountants to work a total of 32,000 direct labor hours per year. The​ company's estimated total indirect costs are $155,000. The direct labor rate is $101 per hour. The company uses direct labor hours as the allocation base for indirect costs. If Baptiste performs a job requiring 52 hours of direct labor and bills the client using a standard markup of 40​% of​ costs, calculate the amount of the​ client's bill.​ (Round any intermediate calculations to the nearest​ cent, and your final answer to the nearest​ dollar.)

A.

$210,080

B.

$5,252

C.

$2,201

D.

$ 7,705

Answer 1

Answer is D. $ 7705
Explanation:
Indirect labour allocation rate per hour
Total Indirect labour			155000
Divide: Total DLH			32000
Indirect labour allocation rate per hour	4.844
Total cost and Billing amount:
Direct labour cost (52 hours @101)	5252
Indirect labour cost (52 hours @4.844)	252
Total cost			5504
Add: Markup 40% of total cost		2201
Billing amount to client		7705