Question

Quiz 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 82,500 direct labor-hours would be required for the period's estimated level of client service. The company also estimated $866,250 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 $883,550 and its actual total direct labor was 90,450 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: Direct materials Direct labor cost Direct labor hours worked $ 38,850 $ 28,800 330 Compute the total job cost for the Xavier Company engagement Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the total Job cost for the Xavier Company engagement. (Round your intermediate calculations to 2 decimal places.) < Prev 5 of 10 !!! Next > earch

Answer 1

Solution 1:

Predetermined overhead rate = Variable overhead rate + Fixed overhead rate

= $0.50 + ($866,250 / 82500) = $11 per DLH

Solution 2:

Computation of Job Cost
Particulars	Amount
Direct materials	$38,850.00
Direct labor	$28,800.00
Overhead applied	$3,630.00
Total manufacturing costs	$71,280.00