Franklin Computer Repair treats each repair order as a job. Overhead is allocated based on the cost of technician time. At the start of the year, annual technician wages were estimated to be $800,000, and company overhead was estimated to be $500,000.
Required
a. Discuss why use of a predetermined overhead rate would be preferred to assigning actual overhead to repair jobs.
b. Suppose a job required parts costing $200 and technician time costing $100. What would be the total cost of the job?