year R &D; project. The most recent 1.Your company is preparing a technical prop
ID: 2564431 • Letter: Y
Question
year R &D; project. The most recent 1.Your company is preparing a technical proposal for a one fiscal year has he following results for the year. Direct Materials Direct labor Overhead G & A Sales $2,445,000 $6,879,000 6,920,600 $ 1,578,100 20,432,200 Calculate the Overhead rate, the G & A rate and the profit margin as a percentage of annual factory cost. Using the rates calculated above, prepare a cost proposal for the following estimated cost factors. Direct materials: Consultants Direct labor: Senior engineer Engineer Technician $573,200 230,000 3,470 hrs @ $47.35/hr 4,335 hrs @ $38.50/hr 9,375 hrs @ $22.25/hrExplanation / Answer
Factory cost is defined as the total cost which is required for the purposes of manufacturing goods. It is the sum total of direct materials, direct labour and manufacturing costs.
Hence, the factory cost would be calculated as follows:
Particulars
Amounts in $
Direct materials
24,45,000.00
Direct labour
68,79,000.00
Manufacturing overhead
69,20,600.00
Total factory cost
162,44,600.00
Formula used
Amount
Explanation
Overhead rate
Manufacturing overhead/Total factory cost
42.60%
6920600/16244600
G&A
G&A costs/total factory cost
9.71%
1578100/16244600
Calculation of profit margin
Particulars
Amounts in $
Direct materials
24,45,000.00
Direct labour
68,79,000.00
Manufacturing overhead
69,20,600.00
G&A
15,78,100.00
Total factory cost
178,22,700.00
Sales
204,32,200.00
Profit margin
26,09,500.00
Profit margin
Net profit/Sales
12.77%
2609500/20432200
Preparation of cost proposal:
Amounts in $
Explanation
Formula used
Direct materials
5,73,200.00
Consultants
2,30,000.00
Direct labour:
Senior Engineer
1,64,304.50
3470*47.35
Formula used number of hours given in question*rate per hour
Engineer
1,66,897.50
4335*38.5
Formula used number of hours given in question*rate per hour
Technician
2,08,593.75
9375*22.25
Formula used number of hours given in question*rate per hour
Welder
66,978.00
2440*27.45
Formula used number of hours given in question*rate per hour
Total factory cost
14,09,973.75
MLB+75000
Total factory cost+75000
14,84,973.75
1409974+75000
Factory cost
14,09,974.00
No the project should not be accepted since the project would only entail recovery of costs for the company and no profit
Factory cost
Total factory cost+50000
14,59,973.75
1409974+50000
Yes the project should be accepted since the project would not only entail recovery of costs for the company but also profit for the company
Particulars
Amounts in $
Direct materials
24,45,000.00
Direct labour
68,79,000.00
Manufacturing overhead
69,20,600.00
Total factory cost
162,44,600.00
Formula used
Amount
Explanation
Overhead rate
Manufacturing overhead/Total factory cost
42.60%
6920600/16244600
G&A
G&A costs/total factory cost
9.71%
1578100/16244600
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