Hansel Corporation has requested bids from several architects to design its new

Question

Hansel Corporation has requested bids from several architects to design its new corporate headquarters. Frey Architects is one of the firms bidding on the job. Frey estimates that the job will require the following direct labor. Frey applies overhead to jobs at 175% of direct labor cost. Frey would like to earn at least $80,000 profit on the architectural job. Based on past experience and market research, it estimates that the competition will bid between 285,000 and $350,000 for the job. What is Frey's estimated cost of the architectural job?

Explanation / Answer

Total Estimated Labour Cost = $ 77,500

Estimated Applied Overhead = 77500 * 175% = $135,625

Total Estimated Cost = $213,125

Estimated Profit = $ 80,000

Estimated Bid Value = $293,125

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