Reference no: EM132533830

Elite Consulting Ltd offers a range of immigration consulting services. The company's service costing system estimates the cost of each consulting job by accumulating costs of the professional labour that works on the job plus a charge for overhead.

The cost of professional labour is charged to jobs using the following three rates:

                                 Cost per hour                     Charge out rate for billing system

Visa application         $300 per hour                    $630 per hour

Visa extension         $75 per hour                        $350 per hour

AAT appeal               225 per hour                 $1000 per hour

The predetermined overhead rate is based on professional labour costs, which are budgeted to be $663600 for the current year. The estimated overhead costs for the current year are budgeted to be:

Management salaries $850,000

Salaries of administration staff $285,000

Depreciation on IT hardware and software $240,000

Office supplies $2,250

Telecommunications $3,150

Insurance $150,000

Depreciation on office fixtures and fittings $11,250

Rent $100,000

Electricity $45,000

Council rates $23,300

During June the company provided three services, which consumed the following quantities of professional labour (in hours):

Required:

Client                      Visa application              Visa Extension             AAT Appeal

Alfa                         50                                100                      10

Beta                         20                               150                          15

Gama                          60                                90                          25

Question 1) Calculate the predetermined overhead rate to be used at Elite Consulting Ltd.

Question 2) Calculate the cost of the three services.

Question 3) Assume Elite Consulting Ltd uses a billing system with the charge out rates shown above. Calculate the client fees for each of the three services.