Tech Solutions is a consulting firm that uses a job-order costing system. Its direct materials consist of hardware and software that it purchases and installs on behalf of its clients. The firm's direct labor includes salaries of consultants that work at the client's job site, and its overhead consists of costs such as depreciation, utilities, and insurance related to the office headquarters as well as the office supplies that are consumed serving clients. Tech Solutions computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 92,500 direct labor-hours would be required for the period's estimated level of client service. The company also estimated $1,156,250 of fixed overhead cost for the coming period and variable overhead of $0.50 per direct labor-hour. The firm's actual overhead cost for the year was $1,177,550 and its actual total direct labor was 97,750 hours. Required: 1. Compute the predetermined overhead rate. 2. During the year, Tech Solutions started and completed the Xavier Company engagement. The following information was available with respect to this job: $ 39,000 $ 30, 600 Direct materials Direct labor cost Direct labor hours worked 370
Tech Solutions is a consulting firm that uses a job-order costing system. Its direct materials consist of hardware and software that it purchases and installs on behalf of its clients. The firm's direct labor includes salaries of consultants that work at the client's job site, and its overhead consists of costs such as depreciation, utilities, and insurance related to the office headquarters as well as the office supplies that are consumed serving clients. Tech Solutions computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 92,500 direct labor-hours would be required for the period's estimated level of client service. The company also estimated $1,156,250 of fixed overhead cost for the coming period and variable overhead of $0.50 per direct labor-hour. The firm's actual overhead cost for the year was $1,177,550 and its actual total direct labor was 97,750 hours. Required: 1. Compute the predetermined overhead rate. 2. During the year, Tech Solutions started and completed the Xavier Company engagement. The following information was available with respect to this job: $ 39,000 $ 30, 600 Direct materials Direct labor cost Direct labor hours worked 370
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter2: Job Order Costing
Section: Chapter Questions
Problem 2MAD: Alvarez Manufacturing Inc. is a job shop. The management of Alvarez Manufacturing Inc. uses the cost...
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![Tech Solutions is a consulting firm that uses a job-order costing system. Its direct materials consist of hardware and software that it
purchases and installs on behalf of its clients. The firm's direct labor includes salaries of consultants that work at the client's job site,
and its overhead consists of costs such as depreciation, utilities, and insurance related to the office headquarters as well as the office
supplies that are consumed serving clients.
Tech Solutions computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it
estimated that 92,500 direct labor-hours would be required for the period's estimated level of client service. The company also
estimated $1,156,250 of fixed overhead cost for the coming period and variable overhead of $0.50 per direct labor-hour. The firm's
actual overhead cost for the year was $1,177,550 and its actual total direct labor was 97,750 hours.
Required:
1. Compute the predetermined overhead rate.
2. During the year, Tech Solutions started and completed the Xavier Company engagement. The following information was available
with respect to this job:
$ 39,000
$ 30,600
Direct materials
Direct labor cost
Direct labor hours worked
370](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb6b57e6d-8315-4385-be1b-99bfdbca7493%2F4b3a0de0-746f-4ca0-a79a-34487777caa5%2Fxtivmrl_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Tech Solutions is a consulting firm that uses a job-order costing system. Its direct materials consist of hardware and software that it
purchases and installs on behalf of its clients. The firm's direct labor includes salaries of consultants that work at the client's job site,
and its overhead consists of costs such as depreciation, utilities, and insurance related to the office headquarters as well as the office
supplies that are consumed serving clients.
Tech Solutions computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it
estimated that 92,500 direct labor-hours would be required for the period's estimated level of client service. The company also
estimated $1,156,250 of fixed overhead cost for the coming period and variable overhead of $0.50 per direct labor-hour. The firm's
actual overhead cost for the year was $1,177,550 and its actual total direct labor was 97,750 hours.
Required:
1. Compute the predetermined overhead rate.
2. During the year, Tech Solutions started and completed the Xavier Company engagement. The following information was available
with respect to this job:
$ 39,000
$ 30,600
Direct materials
Direct labor cost
Direct labor hours worked
370
![Direct materials
Direct labor
Overhead applied
Total manufacturing cost
$4
< Required 1
%24](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb6b57e6d-8315-4385-be1b-99bfdbca7493%2F4b3a0de0-746f-4ca0-a79a-34487777caa5%2Foxo4ih_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Direct materials
Direct labor
Overhead applied
Total manufacturing cost
$4
< Required 1
%24
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