solution of case YSL marketing research
Summary
YSL Marketing Research is a small firm conducts focus group meetings and mail opinion surveys. The YSL’s partner Connie Bachmann has been asked to conduct a survey for Surenex that has the potential to be a valued long-run client. And the firm willing to pay YSL’s normally billing rates.
2.0 Answer the question (a)
The full cost of the Surenex engagement including indirect costs and direct costs. Direct costs consist of travel cost and cost of conducting surveys. In the case, direct cost means direct charge is about $3,000. The professional compensation charges include partner $4,800 and professional staff $4,000. Each of engagement receives an allocation of overhead based on professional compensation charges. The data of estimated total professional compensation and overhead respectively are $1,600,000 and $496,000.
According to OAR= total estimated OH cost/ total estimated professional compensation charges.
Overhead calculation
Estimated overhead $496,000
Estimated professional compensation $1,600,000
Overhead rate 0.31
Job cost summary of Surenex engagement $ $
Direct charges 3,000
Professional compensation charges
Partner salary(40 hours×$120) 4,800
Staff salary(100 hours×$40) 4,000 8,800
Overhead(0.31×$8,800) 2,728
Full cost 14,528
Based on above calculate OAR is about 0.31. The full cost includes profession charges, direct charges and overhead cost. The expected full cost of the Surenex engagement is about $14,528 ($3,000+$8,800+$2,728).
3.0 Answer the question (b)
Every research company wants to conduct research at higher prices than the cost of research. The company profit equals to the sales revenue minus the costs. YSL marketing research is a small firm that bidding on a job and is considering various costs. The
YSL Marketing Research is a small firm conducts focus group meetings and mail opinion surveys. The YSL’s partner Connie Bachmann has been asked to conduct a survey for Surenex that has the potential to be a valued long-run client. And the firm willing to pay YSL’s normally billing rates.
2.0 Answer the question (a)
The full cost of the Surenex engagement including indirect costs and direct costs. Direct costs consist of travel cost and cost of conducting surveys. In the case, direct cost means direct charge is about $3,000. The professional compensation charges include partner $4,800 and professional staff $4,000. Each of engagement receives an allocation of overhead based on professional compensation charges. The data of estimated total professional compensation and overhead respectively are $1,600,000 and $496,000.
According to OAR= total estimated OH cost/ total estimated professional compensation charges.
Overhead calculation
Estimated overhead $496,000
Estimated professional compensation $1,600,000
Overhead rate 0.31
Job cost summary of Surenex engagement $ $
Direct charges 3,000
Professional compensation charges
Partner salary(40 hours×$120) 4,800
Staff salary(100 hours×$40) 4,000 8,800
Overhead(0.31×$8,800) 2,728
Full cost 14,528
Based on above calculate OAR is about 0.31. The full cost includes profession charges, direct charges and overhead cost. The expected full cost of the Surenex engagement is about $14,528 ($3,000+$8,800+$2,728).
3.0 Answer the question (b)
Every research company wants to conduct research at higher prices than the cost of research. The company profit equals to the sales revenue minus the costs. YSL marketing research is a small firm that bidding on a job and is considering various costs. The