Answer:
1. Hourly Direct Labor Cost rate = Direct Labor cost / Direct Labor hours
Hourly Direct Labor Cost rate = 2,500,000 / 25,000
Hourly Direct Labor Cost rate = $100 per hour
Computation of Indirect cost
Office Rent $320,000
Support staff salaries $1,260,000
Utilities $420,000
Total Indirect Costs $2,000,000
Predetermined indirect cost allocation rate = = Total Estimated indirect cost / Total estimated direct labor cost = 2,000,000 / 2,500,000 = 80% of Direct Cost
2. Direct Labor $25,000 (250 * 100)
Indirect Cost $20,000 (25,000 * 80%)
Total Predicted cost $45,000
3. Predicted cost $45,000
Desired Profit $22,500 (50% of $45,000)
Required Service revenue $67,500