$1,800 1,200 Direct material Direct professional labor Direct professional labor Applied overhead: (partner) 2,000 (artistic staff) Partner support ($1,200 x 1,068 8996) Artistic staff support ($2,000x 2,360 118%) 8,428 Total cost The ad agency's annual overhead budget, which totals $756,000 (which includes the costs of the support staff, artistic and photographic supplies, office operation, utilities, rent, insurance, advertising, vehicle maintenance and depreciation.) appears in the illustration of overhead application below: MIDTOWN ADVERTISING AGENCY Annual Overhead Budget For the Year 20x6 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Support staff Receptionist Secretarial Accounting Custodial Support staff benefits $ 8,000 8,0008,000 8,000 32,000 17,50070,000 10,00040,000 7,250 29,000 17,10068,400 40,000 160,000 0,000 120,000 17,500 10,000 7,250 17,100 40,000 30,000 17,500 10,000 7,250 17,100 40,000 30,000 17,500 10,000 7,250 17,100 40,000 30,000 Artistic supplies Photographic supplies Office: Computer Photocopying Office supplies Postage 5,000 3,750 4,500 5,000 3,750 4,500 5,000 3,750 4,500 5,000 20,000 3,750 15,000 4,500 18,000 525 2,100 Utilities: Electricity Heat/air conditioning Internet access Cable TV Telephone Trash collection Other 3,250 4,000 3,250 4,000 375 500 3,250 4,000 375 3,250 13,000 4,00016,000 1,500 500 2,000 775 775 3,100 Building rent Insurance Advertising Vehicle maintenance Depreciation 12,500 3,750 5,000 1,000 600 625 12,500 600 ,400 2,500 12,500 50,000 3,750 15,000 5,000 20,000 12,500 3,750 5,000 5,000 1,000 1,000 4.000 Equipment Vehicles 3,000 12,000 5,000 20,000 5.000 20,000 S189,000 189,000 189,000189,000 $756,000 3,000 5,000 5,000 3,000 5,000 3,000 5,000 Other Total overhead Suppose the firm used a single cost driver, total staff compensation, to apply overhead costs to each ad contract. Exercise 3-41 Part 2 2. Compute Midtown's overhead rate on the basis of this single cost driver. (Round to the nearest whole percentage). Overhead rate