Pluto Travel Services provided the following information:
Direct labor rate: $40 per hour
Predetermined allocation rate for indirect costs: $21 per direct labor hour
Pluto is negotiating a job with a new client.The job will require 10 hours of direct labor.If Pluto wishes to have at least a 15% gross profit on the revenues,it needs to record $713 of revenues.

Question

Quizplus · Accepted Answer

Costs:
 11ea8873_d514_861f_bb89_478ec557c0c3_TB5026_00 Revenues - Total Costs = Gross Profit
If Revenues = X then,
X - $610 = 0.15X
Or, 0.85X = $610
Therefore, X = 717.65

Pluto Travel Services Provided the Following Information