ABC Bhd is planning its trip to Thailand and has to approached a travel agent to
ID: 1175849 • Letter: A
Question
ABC Bhd is planning its trip to Thailand and has to approached a travel agent to calculate the quotation. The finance manager has produced the following cost estimates for the trip.
Diver costs and assistant’s cost--$500
Bus fuel costs--$1000
Hotel accommodation—$15,000
Overheads--$1000
Total costs--$17,500
Profit 25%--$4,375
Total quotation--$21,875
Further information is as follows:
The diver and assistant will have to be recruited for 5 days. The diver is to be recruited at $100 per day and assistant will also have to be recruited as per the police regulations. The cost of the assistant is $50 per day.
The fuel costs consist of $800 and the depreciation costs $200. The bus is not used for this trip could be hired by another group for $250 per day for 5 days. A replacement for the bus could be rented for $200 per day.
Hotel costs consist of the room rates for 5 days for 20 staff that will be going on this trip.
Overheads consist of costs allocated by head office for estimating the costs as part of company policy. Included in the overhead costs were general overhead which were specifically identified to quotation. These were incurred for preparing the quotation. The costs spent was $1000.
Required:
Prepare a quotation based on the relevant costs of the 5 day trip. Justify your answer on each of the values deriving the quotation.
Explanation / Answer
*Depreciation on bus is irrelevant as it will be incurred whether bus is rented or not .
**overhead is a allocated cost that will be incurred whether offer is undertaken or not
Diver costs and assistant’s cost 500 Bus fuel costs 800* Hotel accommodation 15000 Total cost 16300 Profit [16300*.25] 4075 Total quotation 20375