Question

Data Table All operating costs other than professional salaries (travel reimbursements, copy costs, secretarial salaries, office lease, and so forth) can be assigned to the three activities. Total activity costs, cost drivers, and total usage of those cost drivers are estimated as follows Total Activity Cost Total Usage by Corporate Clients Total Usage by Private Clients Activity Cost Driver 10,500 miles 250 copies 750 copies 195,000 2,500 secretarial hours hours $ 233,000 Total operating overhead
1-5

Answer 1

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Requirement -1
Total Operating Overhead		$                         233,000
Total Professional Hours		10000 Hours
Current Operating overhead allocation rate		$                             23.30
($233,000/10,000 Hours)
Requirement -2
Professonal Time	25 Hours*$63 per hour	$                        1,575.00
Operating Overheads	25 Hours*$23.30 per hour	$                           582.50
Total Cost of Job		$                        2,157.50
Markup on Cost		130%
Billed to Client	2157.50*130%	$                       2,804.75
Requirement -3
Activity	Cost	Total of Driver Quantity	Unit	Activity Rate
	A	B		A/B
Transportaion to Clients	$                                 6,000	15,000.00	Miles	$            0.40
Blueprint Copying	$                               32,000	1,000.00	Copies	$          32.00
Office Support	$                             195,000	5,000.00	Secreterial	$          39.00
Requirement -4
Professional Time	25 Hours*$63 per hour	$                        1,575.00
Operating Overheads	Working below	$                           763.00
Total Cost of Job		$                        2,338.00
Markup on Cost		130%
Billed to Client	2157.50*130%	$                       3,039.40
Working for Operating Overheads:
Activity	Activity Rate	Activity for Jobs	Total Cost
	A	B	A*B
Transportaion to Clients	$                                   0.40	125 Miles	$                             50.00
Blueprint Copying	$                                 32.00	4 Copies	$                           128.00
Office Support	$                                 39.00	15 Sec	$                           585.00
Total			$                           763.00
Requirement -5
The ABC systems is more fare to clientes as they are charged based on usage of specific service in ABC