During the most recent year, the firm estimated that it would pay $280,000 to its consultants and incur indirect operating costs of $420,000. Actual consultant labor costs were $295,000 and actual indirect operating costs were $410,000. The cost records for three of Optimum's clients are summarized below: Food and nutritional supplements Nutritional counseling ($12 per hour) Personal fitness training ($17 per hour) Indirect operating costs Judy $ 400 ? 120 340 Tom $ 1,200 ? 240 510 Elizabeth $ 200 144 680 ? Required: 1. Compute the predetermined overhead rate. 2. Determine the total cost of serving each client. 3. Assume the company charges clients an up-front fee of $480. Food and nutritional supplements are priced at 20 percent above cost. Clients are charged $33 per hour for consulting services (both nutrition counseling and personal training). Determine the profitability of each client.
During the most recent year, the firm estimated that it would pay $280,000 to its consultants and incur indirect operating costs of $420,000. Actual consultant labor costs were $295,000 and actual indirect operating costs were $410,000. The cost records for three of Optimum's clients are summarized below: Food and nutritional supplements Nutritional counseling ($12 per hour) Personal fitness training ($17 per hour) Indirect operating costs Judy $ 400 ? 120 340 Tom $ 1,200 ? 240 510 Elizabeth $ 200 144 680 ? Required: 1. Compute the predetermined overhead rate. 2. Determine the total cost of serving each client. 3. Assume the company charges clients an up-front fee of $480. Food and nutritional supplements are priced at 20 percent above cost. Clients are charged $33 per hour for consulting services (both nutrition counseling and personal training). Determine the profitability of each client.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:During the most recent year, the firm estimated that it would pay $280,000 to its consultants and incur indirect operating costs of
$420,000. Actual consultant labor costs were $295,000 and actual indirect operating costs were $410,000. The cost records for three
of Optimum's clients are summarized below:
Food and nutritional supplements
Nutritional counseling ($12 per hour)
Personal fitness training ($17 per hour)
Indirect operating costs
Required 1 Required 2 Required 3
Determine the total cost of serving each client.
Judy
$ 1,630
Total Cost of Serving
Complete this question by entering your answers in the tabs below.
Judy
Tom
$ 2,825 × $
Elizabeth
2,000
$ 400
120
340
Required:
1. Compute the predetermined overhead rate.
2. Determine the total cost of serving each client.
3. Assume the company charges clients an up-front fee of $480. Food and nutritional supplements are priced at 20 percent above
cost. Clients are charged $33 per hour for consulting services (both nutrition counseling and personal training). Determine the
profitability of each client.
> Answer is complete but not entirely correct.
?
< Required 1
Tom
$ 1,200
240
510
?
Required 3 >
Elizabeth
$200
144
680
?
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