Question
During the most recent year, the firm estimated that it would pay $190,000 to its consultants and incur indirect operating costs of $285,000. Actual consultant
During the most recent year, the firm estimated that it would pay $190,000 to its consultants and incur indirect operating costs of $285,000. Actual consultant labor costs were $205,000 and actual indirect operating costs were $275,000. The cost records for three of Optimums clients are summarized below: Judy Tom Elizabeth Food and nutritional supplements $ 400 $ 1,200 $ 200 Nutritional counseling ($16 per hour) 160 320 192 Personal fitness training ($21 per hour) 420 630 840 Indirect operating costs ? ? ? Required: 1. Compute the predetermined overhead rate. 2. Determine the total cost of serving each client. 3. Assume the company charges clients an up-front fee of $390. Food and nutritional supplements are priced at 20 percent above cost. Clients are charged $45 per hour for consulting services (both nutrition counseling and personal training). Determine the profitability of each client.
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JudyTomElizabethProfitability$325selected answer incorrect$450selected answer incorrect$134selected answer incorrect
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