Question

Tibbs

​Realtors, a real estate consulting​ firm, specializes in advising companies on potential new plant sites. The company uses a job order costing system with a predetermined overhead allocation​ rate, computed as a percentage of direct labor costs. At the beginning of

2018​,

managing partner

Peter

Tibbs

prepared the following budget for the​ year:

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​(Click the icon to view the prepared​ budget.)                                                      

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​(Click the icon to view additional​ information.)Read the requirements

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.Requirement 1. Compute

Tibbs

​Realtors' (a) hourly direct labor cost rate and​ (b) predetermined overhead allocation rate.

Begin with​ (a) hourly direct labor cost rate.

				Direct labor
	/		=	cost rate
	/		=		per hour

Now compute

Tibbs

​Realtors' (b) predetermined overhead allocation rate.

Predetermined overhead

/

=

allocation rate

/

=

%

Requirement 2. Compute the predicted cost of the

White

Manufacturing job.

	Tibbs Realtors
	Estimated Cost of the White Manufacturing Job
			hrs. x		=
+
			% x		=
	Total predicted cost

Requirement 3. If

Tibbs

wants to earn a profit that equals

30​%

of the​ job's cost, how much should

he

bid for the

White

Manufacturing​ job?

Add:
Required service revenue

Choose from any list or enter any number in the input fields and then continue to the next question.

Direct labor hours (professionals)	17,500	hours
Direct labor costs (professionals)	$2,800,000
Office rent	350,000
Support staff salaries	1,730,000
Utilities	440,000

Answer 1

1)
(a)
Estimated Direct labor costs	/	Estimated Direct labor hours	=	Direct Labor Cost Rate
$ 2,800,000	/	17,500 hours	=	$ 160 per Hour
(b)
Estimated overhead Costs	/	Estimated Direct labor costs	=	Predetermined Overhead allocation rate
$ 2,520,000 ( $ 350,000 + $ 1,730,000 + $ 440,000 )	/	$ 2,800,000	=	90% of direct labor cost
Direct Labor hours information is not provided in the given Question. So We acnnot Proceed to answer the remaing parts of the Question.
2)
Particulars	Amount (in $ )
Direct labor Cost
Indirect Costs
Total Predicted Cost