Reference no: EM132788959

Question - Nuisance Begins Pvt Ltd - A consulting firm uses a job costing system at its Bengaluru office. It has the following condensed budget for Year 1.

Nuisance Begins Pvt Ltd

Revenues 10,00,00,000

Direct costs - Professional Labor 2,50,00,000

Indirect costs - Client Support 6,50,00,000

Total costs 9,00,00,000

Operating Income 1,00,00,000

Nuisance Begins Pvt Ltd has a single direct cost category (professional labor) and single indirect cost pool (client support). Indirect costs are allocated to jobs on the basis of direct professional labor costs.

Compute the below:

a. Year 1 budgeted indirect cost rate of Nuisance Begins Pvt Ltd

b. The markup rate for pricing jobs is intended to produce operating income equal to 10% of revenues. Compute the markup rate as a % of professional labor costs

c. Nuisance Begins Pvt Ltd is bidding on a consulting job for "Froth on the top", a pub based out of Manipal. The budgeted breakdown of professional labor on the job is as follows:

Compute the budgeted cost of "Froth on the Top" job.

Professional labor category

Budgeted rate per hour Budgeted Hours

Director 20,000 3

Partner 10,000 16

Associate 5,000 40

Assistant 3,000 160

d. How much will Nuisance Begins Pvt Ltd bid for the job if it is to earn its target operating income of 10% of revenues.