A professional service firm uses a normal pricing markup on jobs that is 400% of direct professional labor and an overhead application rate that is 150% of direct professional labor. Budgeted operating income on a particular job is $900,000.
Required: Compute the budgeted amount of direct professional labor costs on this job:
- The Ernie Company has provided information concerning its 2011 projections as follows:
- Net sales $20,000,000
- Fixed manufacturing costs 1,800,000
- Beginning Inventory $0
- Ending inventory $0
- Ernie projects variable manufacturing costs of 60% of net sales. (Note-There are no changes in inventories.)
Required: Compute the projected cost of goods sold.