FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Ace Architects employs two architects, each having a different area of specialization. Caitlin specializes in industrial commercial
construction and Zachary specializes in residential construction. Ace expects to incur total overhead costs of $737,100 during the year
and applies overhead based on annual salary costs. Caitlin is a senior partner, her annual salary is $168,750, and she is expected to
bill 3,000 hours during the year. Zachary is a senior associate, his annual salary is $94,500, and he is expected to bill 2,800 hours
during the year.
a. Calculate the predetermined overhead rate.
Predetermined Overhead Rate
b. Assuming that the hourly billing rate should be set to cover the total cost of services plus a 20% markup, compute the hourly billing
rates for Caitlin and Zachary. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Caltin
Zachary
%
Billing rate
per hour
per hour
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Transcribed Image Text:Ace Architects employs two architects, each having a different area of specialization. Caitlin specializes in industrial commercial construction and Zachary specializes in residential construction. Ace expects to incur total overhead costs of $737,100 during the year and applies overhead based on annual salary costs. Caitlin is a senior partner, her annual salary is $168,750, and she is expected to bill 3,000 hours during the year. Zachary is a senior associate, his annual salary is $94,500, and he is expected to bill 2,800 hours during the year. a. Calculate the predetermined overhead rate. Predetermined Overhead Rate b. Assuming that the hourly billing rate should be set to cover the total cost of services plus a 20% markup, compute the hourly billing rates for Caitlin and Zachary. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Caltin Zachary % Billing rate per hour per hour
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