Reference no: EM131730221

Question - Pearson Architectural Design uses a job-order costing system and applies studio overhead to jobs on the basis of direct staff costs. Because Pearson Architectural Design is a service firm, the names of the accounts it uses are different from the names used in manufacturing companies. The following costs were recorded in January:

Cost of subcontracted work (comparable to direct materials) $90,000

Direct staff costs (comparable to direct labor) $200,000

Studio overhead (comparable to manufacturing overhead cost applied) $320,000

Cost of work completed (comparable to cost of goods manufactured) $570,000 

There were no beginning inventories in January.   

At the end of January, only one job was still in process. This job (the Krimmer Corporation Headquarters project) had been charged with $13,500 in direct staff costs.

Required: Compute the predetermined overhead rate that was used during January.