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Question - McBride and Associates employs two professional appraisers, each having a different specialty. Debbie specializes in commercial appraisals and Tara specializes in residential appraisals. The company expects to incur total overhead costs of $426,450 during the year and applies overhead based on annual salary costs. The salaries and billable hours of the two appraisers are estimated to be as follows:
Debbie Tara
Annual Salary $190,000 $94,300
Billable Hours 2,500 2,050
The accountant for McBride and Associates is computing the hourly rate that should be used to charge clients for Debbie and Tara's services. The hourly billing rate should be set to cover the total cost of services (salary plus overhead) plus a 30 percent markup.
Required:
1. Compute the predetermined overhead rate.
2. Compute the hourly billing rate for Debbie and Tara.
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