Question

3) Fogelin Promotional Services uses a job order system for costing and billing promotional services for dance and ballet performances. Fogelin has 6 public relations specialists, plus an office staff. At the beginning of 2014, Fogelin estimated the total cost of salaries and benefits for the public relations specialists at $803,200, and a total of 5,200 billable hours for the year. The office and administrative costs were estimated at $576,800. The allocation base for office and administrative costs is billable hours.

A new client is contracting with Fogelin to promote a ballet tour in the U.S. Fogelin estimates that the job will require 73 billable hours of specialist time. If Fogelin wishes to make a 10% gross profit on the job, what price should Fogelin quote to the client?

Answer 1