A company employs two consultants. Judy specializes in tax consulting and Steve specializes in management consulting. The company expects to incur total overhead costs of $411,600 during the year and applies overhead based on annual salary costs. Judy's annual salary is $220,000, and she is expected to bill 2,000 hours during the year. Steve's annual salary is $123,000, and he is expected to bill 1,500 hours during the year. Required: 1.Calculate the predetermined overhead rate. 2.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.
A company employs two consultants. Judy specializes in tax consulting and Steve specializes in management consulting. The company expects to incur total overhead costs of $411,600 during the year and applies overhead based on annual salary costs. Judy's annual salary is $220,000, and she is expected to bill 2,000 hours during the year. Steve's annual salary is $123,000, and he is expected to bill 1,500 hours during the year. Required: 1.Calculate the predetermined overhead rate. 2.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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
(J)
A company employs two consultants. Judy specializes in tax consulting and Steve specializes in management consulting. The company expects to incur total
Required:
1.Calculate the predetermined overhead rate.
2.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.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education