ech Solutions is a consulting firm that uses a joborder cost

ech Solutions is a consulting firm that uses a job-order costing system. Its direct materials consist of hardware and software that it purchases and installs on behalf of its clients. The firm\'s direct labor includes salaries of consultants that work at the client\'s job site, and its overhead consists of costs such as depreciation, utilities, and insurance related to the office headquarters as well as the office upplies that are consumed serving clients. ech Solutions computes its predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it stimated that 87500 direct labor-hours would be required for the period\'s estimated level of client service. The company also stimated $1,006.250 of fixed overhead cost for the coming period and variable overhead of $0.50 per direct labor-hour. The firm\'s ctual overhead cost for the year was $1,025,150 and its actual total direct labor was 92.400 hours. Required: . Compute the predetermined overhead rate. ·During theyear, Tech Solutions started and completed the Xavier Company engagement. The following information was available with respect to this job: Direct materials Direct labor cost s 52,280 24,100 350 Compute the total job cost for the Xavier Company engagement. Complete this question by entering your answers in the tabs below. Prox 5of 13

Solution

Part 1 - Predetermined overhead rate

Predetermined Fixed overhead rate (B)

(estimated total fixed Manufacturing overhead/estimated total amount of allocation base i.e. direct labour hours)

($1006250 fixed overhead/87500 direct labour hours)

Part 2 - Computation of the total job cost for the xavier company engagement

Particulars	Amount
Predetermined Variable overhead rate (given) (A)	$0.5 Per direct Labour hour
Predetermined Fixed overhead rate (B) (estimated total fixed Manufacturing overhead/estimated total amount of allocation base i.e. direct labour hours) ($1006250 fixed overhead/87500 direct labour hours)	$11.5 per direct labour hour
Predetermined overhead rate (A + B)	$12 Per direct labour hours