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.