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:
Repair and maintenance - $1,500,000.00
Stationary supplies - $150,000.00
Electricity 55% of budgeted amount of $420,000.00
Petrol - $312,000.00
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:
prime cost of the job
absorption rate in $ per labour hours
Total cost of the contract
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