Acme Surveyors charge $100 per hour for a Professional Surveyor (PS) and $75 per hour for a field crew (FC). Administrative staff hours are estimated to be 25% of PS and FC time and are charged at $25/hour. The profit rate charged is 10% on all labor. If a project is estimated to take one week of the PS’s time and two weeks of the field crew’s time, what is the estimated marked up labor cost?
Explanation
Answer: C - If a project is estimated to take one week of the PS’s time and two weeks of the field crew’s time, the estimated marked up labor cost is $11,825.
Solution
1. Calculate cost of labor
PS: $100/hour x one week x 40 hour/week = $4,000
FC: $75/hour x two weeks x 40 hour/week = $6,000
Administrative hours: (25%)(PS time + FC time) = (0.25)(40+80) = 30 hours
Administrative labor cost: $25/hour x 30 hours = $750
Total labor cost = $4,000 + $6,000 + $750 = $10,750
2. Add profit to labor cost
Profit rate = 10%
Marked up labor cost = $10,750 x 1.10 = $11,825
