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Hansel Company has requested bids from several architects to design its new corporate headquarters. Frey Architects is bidding on the job. Frey estimates that the job will require the following direct labor.   Direct Labor Estimated Hours Hourly Rate Architects 158 $ 300 Staff 316 75 Clerical 600 20    Frey applies overhead to jobs at 175% of direct labor cost. Frey wants to earn at least $70,000 profit on the architectural job. Based on past experience and market research, it estimates that the competition will bid between $289,000 and $358,000 for the job. 1. What is Frey’s estimated cost of the architectural job? 2. If Frey bids a price of $289,000, what is its expected profit? Will it earn its target profit of $70,000? 3. What bid price would earn the desired $70,000 target profit?

Hansel Company has requested bids from several architects to design its new corporate headquarters. Frey Architects is bidding on the job. Frey estimates that the job will require the following direct labor.   Direct Labor Estimated Hours Hourly Rate Architects 158 $ 300 Staff 316 75 Clerical 600 20    Frey applies overhead to jobs at 175% of direct labor cost. Frey wants to earn at least $70,000 profit on the architectural job. Based on past experience and market research, it estimates that the competition will bid between $289,000 and $358,000 for the job. 1. What is Frey’s estimated cost of the architectural job? 2. If Frey bids a price of $289,000, what is its expected profit? Will it earn its target profit of $70,000? 3. What bid price would earn the desired $70,000 target profit?

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter4: Job-order Costing And Overhead Application
Section: Chapter Questions
Problem 3MCQ: In a normal costing system, the cost of a job includes a. actual direct materials, actual direct...
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Hansel Company has requested bids from several architects to design its new corporate headquarters. Frey Architects is bidding on the job. Frey estimates that the job will require the following direct labor.
 

Direct Labor Estimated Hours Hourly Rate
Architects 158 $ 300
Staff 316 75
Clerical 600 20

  
Frey applies overhead to jobs at 175% of direct labor cost. Frey wants to earn at least $70,000 profit on the architectural job. Based on past experience and market research, it estimates that the competition will bid between $289,000 and $358,000 for the job.

1. What is Frey’s estimated cost of the architectural job?
2. If Frey bids a price of $289,000, what is its expected profit? Will it earn its target profit of $70,000?
3. What bid price would earn the desired $70,000 target profit?

If Frey bids a price of $289,000, what is its expected profit? Will it earn its target profit of $70,000? If Frey bids a price of $289,000, what is its expected profit? If Frey bids a price of $289,000, will it earn its target profit of $70,000?
Transcribed Image Text:If Frey bids a price of $289,000, what is its expected profit? Will it earn its target profit of $70,000? If Frey bids a price of $289,000, what is its expected profit? If Frey bids a price of $289,000, will it earn its target profit of $70,000?
What is Frey's estimated cost of the architectural job? Direct labor Estimated hours Total estimated labor cost Estimated Cost Hourly rate Overhead Estimated Applied Overhead Total estimated cost OH base Labor cost OH rate Total Cost
Transcribed Image Text:What is Frey's estimated cost of the architectural job? Direct labor Estimated hours Total estimated labor cost Estimated Cost Hourly rate Overhead Estimated Applied Overhead Total estimated cost OH base Labor cost OH rate Total Cost
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