Velvet Ltd provides legal services and has firms across the Asia-Pacific. It adopts a job costing system, where direct costs are charged to individual clients and indirect costs are charged to jobs using a predetermined overhead rate. Velvet Ltd uses direct cost as the allocation base. Igor, Velvet Ltd’s management accountant, anticipates the following costs for the upcoming year. Cost Percentage of direct costs Professional staff salary 3,200,000 95% Administrative staff salary 370,000 60% Rent and insurance expenses 630,000 0% Utilities expenses 310,000 0% Law Society membership 120,000 0% Travel expenses 310,000 92% Other costs 200,000 36% Suppose the direct costs incurred for Job 2016 is $58,000. Required: Calculate the total cost of Job 2016.
Velvet Ltd provides legal services and has firms across the Asia-Pacific. It adopts a
|
Cost |
Percentage of direct costs |
|
|
Professional staff salary |
3,200,000 |
95% |
|
Administrative staff salary |
370,000 |
60% |
|
Rent and insurance expenses |
630,000 |
0% |
|
Utilities expenses |
310,000 |
0% |
|
Law Society membership |
120,000 |
0% |
|
Travel expenses |
310,000 |
92% |
|
Other costs |
200,000 |
36% |
Suppose the direct costs incurred for Job 2016 is $58,000.
Required:
Calculate the total cost of Job 2016.
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