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QUESTION
Ferguson Enterprises has been asked to submit a quotation for a job.
Ferguson Enterprises has been asked to submit a quotation for a job. They hope to make a 30% net profit in revenues, based on the estimated costs of 10 kg of direct goods, each kg costing $10 and 20 hours of direct labor, each labor hour costing $5.
- Recoverable rate of variable production overheads is $2
- Annual budget for the fixed production overheads is $100,000.
If there are 10,000 budgeted labor hours annually and other expenses are recovered at $50 per job, which is the right quotation for Ferguson Enterprises to get a 30% profit?
