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Q17-6TI

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Horngren'S Financial And Managerial Accounting
Found in: Page 930

Short Answer

Question: Wesson Company is a consulting firm. The firm expects to have $45,000 in indirect costs during the year and bill customers for 6,000 hours. The cost of direct labor is $75 per hour.

16. Calculate the predetermined overhead allocation rate for Wesson using estimated billable hours for the allocation base.

17. Wesson completed a consulting job for George Peterson and billed the customer for 15 hours. What was the total cost of the consulting job?

18. If Wesson wants to earn a profit equal to 60% of the cost of a job, how much should the company charge Mr. Peterson?

Answer:

The predetermined overhead allocation rate is $7.50 per hour.

The total cost of the consulting job for 15 hours is $112.50.

The amount charged by the company from Mr. Peterson is $12 per hour.

See the step by step solution

Step by Step Solution

Step 1: Predetermined overhead allocation rate

Step 2: Total cost of the consulting job for 15 hours

Step 3: Amount charged by the company from Mr. Peterson

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