Computing budgeted overhead rates
Schertzer and Trebbi have a professional service firm that has the following budgeted costs for the current year:
Associates’ salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $300,000
Depreciation–equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
Fringe benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Lease expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220,000
Partners’ salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Telephone and fax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Compute the budgeted overhead rate for the coming year, using direct labor dollars as the overhead allocation base.
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