Your company is a provider of luxury transportation service that offers charter service. The following...
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Accounting
Your company is a provider of luxury transportation service that offers charter service. The following estimated overhead cost (indirect cost) was gathered from its annual budget for the current period:
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Repair and maintenance - $1,500,000.00
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Stationary supplies - $150,000.00
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Electricity 55% of budgeted amount of $420,000.00
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Petrol - $312,000.00
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Administrative expenses - $65,000.00
The company uses industry standard labour rates of $3,500.00 per hour sfor drivers and has budgeted a total of 2,000 labour hours for the year. It also budgeted a total of 250 charters for the year.
The company was awarded a contract to transport workers employed in various government organizations. The contract is for 150 labour hours.
Calculate the following. Show all workings:
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prime cost of the job
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absorption rate in $ per labour hours
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Total cost of the contract
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