Compute the firm predetermined overhead rate

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Question - The Meyers CPA firm has the following overhead budget for the year:

Overhead

 

Indirect materials

$480,000

Indirect labor

1,870,000

Depreciation - Building

329,000

Depreciation - Furniture

61,000

Utilities

375,000

Insurance

52,000

Property taxes

66,000

Other expenses

171,000

Total

$3,404,000

The firm estimates total direct labor cost for the year to be $2,127,500. The firm uses direct labor cost as the cost driver to apply overhead to clients.

During January, the firm worked for many clients; data for two of them follow:

Gargus account

 

Direct labor

$4,300

Feller account

 

Direct labor

$10,300

Required:

1. Compute the firm's predetermined overhead rate.

2. Compute the amount of overhead to be charged to the Gargus and Feller accounts using the predetermined overhead rate calculated in requirement 1.

3. Compute total job cost for the Gargus account and the Feller account.

Reference no: EM132224888

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