A company employees two consultants who each have a different specialization. Caitlin specializes in industrial commercial construction and Zachary specializes in residential construction. The company expects to incur total overhead costs of $573,540 during the year and applies overhead based on annual salary costs. Caitlin's annual salary is $168,300, and she is expected to bill 2,400 hours during the year. Zachary's annual salary is $92,400, and he is expected to bill 2,200 hours during the year. Required: a. Calculate the predetermined overhead rate. b. Assuming that the hourly billing rate should be set to cover the total cost of services plus a 25% markup, compute the hourly billing rates for Caitlin and Zachary Complete this question by entering your answers in the tabs below. Required A Required B Calculate the predetermined overhead rate. Predetermined overhead rate % < Required A Required B >

A company employees two consultants who each have a different specialization. Caitlin specializes in industrial commercial construction and Zachary specializes in residential construction. The company expects to incur total overhead costs of $573,540 during the year and applies overhead based on annual salary costs. Caitlin's annual salary is $168,300, and she is expected to bill 2,400 hours during the year. Zachary's annual salary is $92,400, and he is expected to bill 2,200 hours during the year. Required: a. Calculate the predetermined overhead rate. b. Assuming that the hourly billing rate should be set to cover the total cost of services plus a 25% markup, compute the hourly billing rates for Caitlin and Zachary Complete this question by entering your answers in the tabs below. Required A Required B Calculate the predetermined overhead rate. Predetermined overhead rate % < Required A Required B >

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 6E: Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of...

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Ace Architects employs two architects, each having a different area of specialization. Caitlin specializes in industrial commercial construction and Zachary specializes in residential construction. Ace expects to incur total overhead costs of $737,100 during the year and applies overhead based on annual salary costs. Caitlin is a senior partner, her annual salary is $168,750, and she is expected to bill 3,000 hours during the year. Zachary is a senior associate, his annual salary is $94,500, and he is expected to bill 2,800 hours during the year. a. Calculate the predetermined overhead rate. Predetermined Overhead Rate b. Assuming that the hourly billing rate should be set to cover the total cost of services plus a 20% markup, compute the hourly billing rates for Caitlin and Zachary. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Caltin Zachary % Billing rate per hour per hour
McBride and Associates employs two professional appraisers, each having a different specialty. Debbie specializes in commercial appraisals and Tara specializes in residential appraisals. The company expects to incur total overhead costs of $394,200 during the year and applies overhead based on annual salary costs. The salaries and billable hours of the two appraisers are estimated to be as follows: Debbie $173,880 2,300 Tara Annual Salary $88,920 1,950 Billable Hours The accountant for McBride and Associates is computing the hourly rate that should be used to charge clients for Debbie and Tara's services. The hourly billing rate should be set to cover the total cost of services (salary plus overhead) plus a 20 percent markup. Required: 1. Compute the predetermined overhead rate. 2. Compute the hourly billing rate for Debbie and Tara.
Pinnacle Consulting employs two CPAs, each having a different area of specialization. Judy specializes in tax consulting and Steve specializes in management consulting. Pinnacle expects to incur total overhead costs of $419,400 during the year and applies overhead based on annual salary costs. Judy is a senior partner, her annual salary is $225,000, and she is expected to bill 2,200 hours during the year. Steve is a senior associate, his annual salary is $124,500, and he is expected to bill 1,500 hours during the year. Required: Calculate the predetermined overhead rate. Assuming that the hourly billing rate should be set to cover the total cost of services plus a 25% markup, compute the hourly billing rates for Judy and Steve.
Amy Andrews is a CPA who works as a managerial accounting consultant for a variety of firms. To determine her hourly rate, Amy uses a cost-plus pricing system, which she updates each year. The hourly cost of her assistant (including taxes and benefits) is $18, the hourly cost of her office space is $3, the hourly cost of her marketing and other overhead materials is $5, and Amy's own hourly salary (again, including taxes and benefits) is $84. Amy adds a 30% premium to her costs. What is her hourly rate using a cost-plus pricing strategy?
Amy Andrews is a CPA who works as a managerial accounting consultant for a variety of firms. To determine her hourly rate, Amy uses a cost-plus pricing system, which she updates each year. The hourly cost of her assistant (including taxes and benefits) is $18, the hourly cost of her office space is $3, the hourly cost of her marketing and other overhead materials is $5, and Amy's own hourly salary (again, including taxes and benefits) is $84. Amy adds a 30% premium to her costs. What is her hourly rate using a cost-plus pricing strategy? 1:02 Multiple Choice $115 $143 $110 $140 Mc Graw MacBook Pro %23 %24 & 2 3 4 6 7 8. R. Y P D H J K V N mmand command option O O O
Lisa Claussen, CPA, pays her new staff accountant, Gina, a salary equivalent to $27 per hour while Lisa receives a salary equivalent to $39 per hour. The firm's predetermined indirect cost allocation rate for the year is $16 per hour. Claussen bills for the firm's services at 25% over cost. Assume Lisa works 1 hours and Gina works 16 hours preparing a tax return for Mikayla Jones. 1. What is the total cost of preparing Jones's tax return? 2. How much will Lisa bill Jones for the tax work? 1. What is the total cost of preparing Jones's tax return? Enter the direct and indirect costs for preparing Jones's tax return. Direct Cost: Lisa's time Direct Cost: Gina's time Total Direct Cost: Indirect Cost: Total cost of preparing tax return hrs. hrs. hrs.
Brenda Sheldon, CPA, pays her new staff accountant, Abby , a salary equivalent to $21 per hour while Brenda receives a salary equivalent to $37 per hour. The firm's predetermined indirect cost allocation rate for the year is $11 per hour. Sheldon bills for the firm's services at 34% over cost. Assume Brenda works 6 hours and Abby works 8 hours preparing a tax return for Mikayla Touchstone. 1. What is the total cost of preparing Touchstone's tax return? 2. How much will Brenda bill Touchstone for the tax work?
McBride and Associates employs two professional appraisers, each having a different specialty. Debbie specializes in commercial appraisals and Tara specializes in residential appraisals. The company expects to incur total overhead costs of $426,450 during the year and applies overhead based on annual salary costs. The salaries and billable hours of the two appraisers are estimated to be as follows: Annual Salary Billable Hours Debbie $190,000 2,500 The accountant for McBride and Associates is computing the hourly rate that should be used to charge clients for Debbie and Tara's services. The hourly billing rate should be set to cover the total cost of services (salary plus overhead) plus a 30 percent markup. Tara $94,300 2,050 Required: 1. Compute the predetermined overhead rate. 2. Compute the hourly billing rate for Debbie and Tara. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the predetermined overhead rate. Predetermined Overhead…
Seal Financial Advisors provides accounting and finance assistance to customers in the retail business. Seal has four professionals on staff and an office with six clerical staff. Total compensation, including benefits, for the professional staff runs about $573,000 per year, and normal billable hours are 8,300 hours per year. The professional staff keep detailed time sheets organized by client number. The total office and administrative costs for the year are $755,000. Seal allocates office and administrative costs to clients monthly, using a predetermined overhead allocation rate based on billable hours. What is the predetermined overhead allocation rate that Seal will use for office and administrative costs? (Round your answer to the nearest cent.) A. $69.04 per hour B. $21.93 per hour C. $160.00 per hour D. $90.96 per hour
Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of $25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,500 orders per year. The cost of each PC system is $1,100 per year. In addition to the salaries, Elliott spends $27,560 for forms, postage, and other supplies (assuming 26,000 purchase orders are processed). During the year, 25,350 orders were processed. Required: 1. Which of the resources associated with purchasing can be classified as flexible resources? Forms, Postage and Supplies Which of the resources associated with purchasing can be classified as committed resources? PC system and clerks 2. Compute the total activity availability, and break this into activity usage and unused activity. Activity availability: fill in the blank 3 purchase orders Activity usage: fill in the blank…
Reggie Wilmore has just started a new business—building and installing custom garage organization systems. Reggie builds the cabinets and work benches in his workshop, then installs them in clients’ garages. Reggie figures his overhead for the coming year will be $12,000. Since his business is labor intensive, he plans to use direct labor hours as his overhead driver. For thecoming year, he expects to complete 100 jobs, averaging 25 direct labor hours each. However,he has the capacity to complete 125 jobs averaging 25 direct labor hours each.Required:1. Four measures of activity level were mentioned in the text. Which two measures is Reggie onsidering in computing a predetermined overhead rate?2. Compute the predetermined overhead rates using each of the measures in your answer toRequirement 1.3. Which one would you recommend that Reggie use? Why?
The managing partner at Mina's Accounting Service typically hires one part-time intern to complete her client's basic tax returns. Mina expects her intern to complete 280 of these basic returns, estimating each one to take 30 minutes of the intern's time. Mina pays her intern $25/hr and incurs additional variable overhead costs of $20/hr associated with the resources that are needed behind the scenes for these jobs. What cost of services should Mina budget for all basic tax returns this season, and how much should she charge each client if she wants to earn a 60% gross margin on each of these returns?