Tech Solutions is a consulting firm that uses a job-order costing system. Its direct materials consist of hardware and s
Posted: Sat Feb 19, 2022 2:32 pm
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 97,500 direct labor-hours would be required for
the period’s estimated level of client service. The company also
estimated $1,316,250 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 $1,337,350 and its actual
total direct labor was 101,100 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:
predetermined overhead rate :
Direct materials :
Direct labor :
Overhead applied :
Total manufacturing cost :
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 97,500 direct labor-hours would be required for
the period’s estimated level of client service. The company also
estimated $1,316,250 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 $1,337,350 and its actual
total direct labor was 101,100 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:
predetermined overhead rate :
Direct materials :
Direct labor :
Overhead applied :
Total manufacturing cost :