tech solutions is a consulting firm that uses job - order costing. its direct materials consist of hardware…

tech solutions is a consulting firm that uses job - order 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 labor - hours. at the beginning of the year, it estimated 80,000 direct labor - hours would be required for the periods estimated level of client service. the company also estimated $680,000 of fixed overhead cost for the coming period and variable overhead of $0.50 per direct labor - hour. the firms actual overhead cost for the year was $692,000 and its actual total direct labor was 83,000 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 for this job: direct materials $38,000 direct labor cost $21,000 direct labor - hours worked 280 compute the total job cost for xavier company. answer is not complete. complete this question by entering your answers in the tabs below. required 1 required 2 compute the predetermined overhead rate. note: round your answer to 2 decimal places. predetermined overhead rate per dlh

tech solutions is a consulting firm that uses job - order 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 labor - hours. at the beginning of the year, it estimated 80,000 direct labor - hours would be required for the periods estimated level of client service. the company also estimated $680,000 of fixed overhead cost for the coming period and variable overhead of $0.50 per direct labor - hour. the firms actual overhead cost for the year was $692,000 and its actual total direct labor was 83,000 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 for this job: direct materials $38,000 direct labor cost $21,000 direct labor - hours worked 280 compute the total job cost for xavier company. answer is not complete. complete this question by entering your answers in the tabs below. required 1 required 2 compute the predetermined overhead rate. note: round your answer to 2 decimal places. predetermined overhead rate per dlh

Answer

Explanation:

Step1: Calculate fixed overhead rate

Fixed overhead rate = $\frac{\text{Estimated fixed overhead cost}}{\text{Estimated direct - labor hours}}$ Estimated fixed overhead cost = $680000$, Estimated direct - labor hours = $80000$ Fixed overhead rate = $\frac{680000}{80000}= 8.5$

Step2: Calculate predetermined overhead rate

Predetermined overhead rate = Fixed overhead rate+Variable overhead rate Variable overhead rate = $0.50$ per direct - labor hour Predetermined overhead rate = $8.5 + 0.50=9.00$ per direct - labor hour

Step3: Calculate overhead applied to Xavier Company

Overhead applied = Predetermined overhead rate×Actual direct - labor hours for Xavier Company Actual direct - labor hours for Xavier Company = $280$ Overhead applied = $9.00×280 = 2520$

Step4: Calculate total job cost for Xavier Company

Total job cost=Direct materials+Direct labor cost+Overhead applied Direct materials = $38000$, Direct labor cost = $21000$ Total job cost = $38000+21000 + 2520=61520$

Answer:

  1. Predetermined overhead rate: $9.00$ per DLH
  2. Total job cost for Xavier Company: $61520$