Tech Solutions is a consulting firm that uses joborder costing. Its direct materials consist of hardware and software it purchases and installs on behalf of its clients. The firms direct labor includes salaries of consultants who work at the clients job site, and its overhead consists of costs such as depreciation, utilities, and insurance related to the office headquarters as well as the office supplies consumed serving clients.
Tech Solutions computes its predetermined overhead rate annually based on direct laborhours. At the beginning of the year, it estimated direct laborhours would be required for the periods estimated level of client service. The company also estimated $ of fixed overhead cost for the coming period and variable overhead of $ per direct laborhour. The firms actual overhead cost for the year was $ and its actual total direct labor was hours.
Required:
Compute the predetermined overhead rate.
During the year, Tech Solutions started and completed the Xavier Company engagement. The following information was available for this job:
Direct materials $
Direct labor cost $
Direct laborhours worked
Compute the total job cost for Xavier Company.
