Reference no: EM132715109

Problem - Job Order Costing for a Service Business

The Mad-Fly Agency provides consulting services to a variety of clients across the country. The agency accumulates costs for each consulting project on the basis of direct labor costs and allocated overhead costs. Mad-Fly's estimated direct labor and overhead costs for the year are as follows:

Direct labor hours (professional staff) 20,000

Hourly rate for professional staff $180 per hours

Estimated total overhead costs $1,200,000

Mad-Fly allocates overhead costs to individual jobs based on the total estimated direct labor hours of its professional services staff.

Required -

a. Determine Mad-Fly's estimated predetermined overhead rate for the year.

b. Mad-Fly started and completed a consulting job for MT Industries during the year (Job 402). The job required 200 direct labor hours of professional staff. Determine the cost of the MT Industries job (Job 402).