Avant-garde Architects (AGA) specializes in industrial properties. It has fi ve architects who work on the projects directly with clients, and each of the architects’ annual salary is $231,000 based on 2,200 hours per year. The architect will not be paid more, if he or she works more than 2,200 hours per year. The architect’s hours are traced and charged to the project directly. The overhead costs include staff members’ salary, supplies, offi ce related expenses, etc. The overhead costs are allocated to projects based on the architects’ hours. The budgeted overhead cost for the year is $1,980,000. The actual overhead cost for the year is $2,002,500, and the architect worked 2,250 hours this year.
Rubin Developer Ltd. was working on an industrial park, and commissioned AGA to be the architect for the project. AGA estimated the project would take 3,600 hours. At the end of the project, the project took architects 3,620 hours to complete.

REQUIRED

A. What is the architect’s hourly rate? What is the budgeted overhead rate?
B. What is the quote for Rubin’s project, if AGA uses normal job costing, with a 50% mark up on the total costs?
C. What is the actual job cost for Rubin’s project? What is the amount of over- or underapplied overhead?