Getta Geek Ltd offers a range of IT consulting services. The companys service costing system estimates the cost of each consulting job by accumulating costs of the professional labour that works on the job plus a charge for overhead.

The cost of professional labour is charged to jobs using the following three rates:

IT Trainee	$20 per hour
IT graduate	$50 per hour
IT senior consultant	$150 per hour

The predetermined overhead rate is based on professional labour costs, which are budgeted to be $442 400 for the current year. The estimated overheard costs for the current year as budgeted to be:

Management salaries	$490000
Salaries of clerical and reception staff	190000
Depreciation on IT hardware and software	160000
Stationery	15000
Telecommunications	21000
Insurance	120000
Depreciation on office fixtures and fittings	7500
Rent	60500
Electricity	26350
Council rates	15650

During the month of May the company provided three services, which consumed the following quantities of professional labour (in hours):

Client	IT Trainee	IT Graduate	Senior consultant
Smith and Sons	50	100	15
Jones and Partners	20	140	10
The business Centre	70	80	20

Required:

1. Calculate the predetermined overhead rate to be used at Getta Geek (1 mark)

2.Calculate the cost of the three services (4 marks)

3. How might the management of Getta Geek use this information? (1 mark)

4. How would Getta Geeks approach differ if the firm used a billing rather than a costing system? (1 mark)