Tech 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 supplies that are consumed serving clients. Tech Solutions computes its predetermined overhead rate annually on the basis of direct labor - hours. At the beginning of the year, it estimated that 55,000 direct labor - hours would be required for the period's estimated level of client service. The company also estimated $302, 500 of fixed overhead cost for the coming period and variable overhead of $0.50 per direct labor-hour. The firm's actual overhead cost for the year was $321, 300 and its actual total direct labor was 58, 850 hours. Required: 1. Compute the predetermined overhead rate. 2. During the year, Tech Solutions started and completed the Xavier Company engagement. The following information was available with respect to this job: Direct materials $ 50, 850 Direct labor cost S 27,300 Direct labor-hours worked 220
Tech 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 supplies that are consumed serving clients. Tech Solutions computes its predetermined overhead rate annually on the basis of direct labor - hours. At the beginning of the year, it estimated that 55,000 direct labor - hours would be required for the period's estimated level of client service. The company also estimated $302, 500 of fixed overhead cost for the coming period and variable overhead of $0.50 per direct labor-hour. The firm's actual overhead cost for the year was $321, 300 and its actual total direct labor was 58, 850 hours. Required: 1. Compute the predetermined overhead rate. 2. During the year, Tech Solutions started and completed the Xavier Company engagement. The following information was available with respect to this job: Direct materials $ 50, 850 Direct labor cost S 27,300 Direct labor-hours worked 220
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Tech 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 supplies that are consumed serving clients. Tech
Solutions computes its predetermined overhead rate annually on the basis of direct labor - hours. At the beginning of the year, it estimated that 55,000 direct labor - hours would be required for the period's estimated level of
client service. The company also estimated $302, 500 of fixed overhead cost for the coming period and variable overhead of $0.50 per direct labor - hour. The firm's actual overhead cost for the year was $321, 300 and its actual
total direct labor was 58, 850 hours. Required: 1. Compute the predetermined overhead rate. 2. During the year, Tech Solutions started and completed the Xavier Company engagement. The following information was
available with respect to this job: Direct materials $ 50, 850 Direct labor cost $ 27, 300 Direct labor - hours worked 220
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