Peter Realtors, a real estate consulting firm, specializes in advising companies on potential new plant sites. The company uses a job order costing system with a predetermined overhead allocation rate, computed as a percentage of direct labor costs. At the beginning of 2016, managing partner Andrew Peters Prepared the following budget for the year:

Chance Manufacturing, Inc. is inviting several consultants to bid for work. Andrew Peters wants to submit a bid. He estimates that this job will require about 250 direct labor hours.

Direct labor hours (professionals) 25,000hours
Direct labor costs (professionals) $2,500,000
Office rent 320,000
Support staff salaries 1,260,000
Utilities 420,000

Requirements:

1.Compute Peters Realtors’ (a) hourly direct labor cost rate and (b) predetermined overhead allocation rate.
2.Compute the predicted cost of the Chance Manufacturing job.
3.If Peters wants to earn a profit that equals 50% of the job’s cost, how much should he bit for the Chance Manufacturing job?