Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Information relating to Geller Inc. follows: i (Click the icon to view the company's information.) 1. Compute Geller's indirect cost allocation rate 2. Compute the

image text in transcribed
image text in transcribed
Information relating to Geller Inc. follows: i (Click the icon to view the company's information.) 1. Compute Geller's indirect cost allocation rate 2. Compute the total costs assigned to the Werner and Dobbins engagements. 3. Compute the operating income from the Werner and Dobbins engagements. X More info Requirement 1. Compute Geller's indirect cost allocation rate. Geller Inc. is a technology consulting firm focused on website development and integration of internet business applications. President Judy Post's ear is ringing First identify the formula used to compute the indirect cost allocation rate, then compute the rate. (Round your answer to two decimal places.) after an unpleasant call from client Jeff Werner. Werner was irate after opening his bill for Geller's redesign of his company's website. Werner said that Geller's major Indirect cost allocation rate (per hr) competitor, Beta Applications, charged much lower fees to another company for which Werner serves on the board of directors. Post is puzzled for two reasons. First, she is confident that her firm knows Requirement 2. Compute the total costs assigned to the Werner and Dobbins engagements. (Round your answers to the nearest whole dollar.) website design and support as well as any of Geller's competitors. Post cannot understand how Beta Applications can undercut Geller's rates and still make a Werner Dobbins profit. But Beta Applications is reputed to be very profitable. Second, just yesterday Post received a call from client Paul Dobbins. Dobbins was happy with the excellent service and reasonable fees Post charged him for adding a database-driven job-posting feature to his company's website. Post was surprised by Dobbins's compliments because this was an unusual job for Geller that required Total costs development of complex database management and control applications, and she had felt a little uneasy accepting it. Requirement 3. Compute the operating income from the Werner and Dobbins engagements. (Round your answers to the nearest whole dollar.) Like most consulting firms, Geller traces direct labour to individual engagements jobs). Geller allocated indirect costs to engagements using a budgeted rate based Werner Dobbins on direct labour hours. Post is happy with this system, which she has used since she established Geller in 1996. Post expects to incur $718,000 of indirect costs this year, and she expects her Less: firm to work 5,200 direct labour hours. Post and the other systems consultants earn $350 per hour. Clients are billed at 165% of direct labour cost. Last month, Operating income Geller's consultants spent 120 hours on Werner's engagement. They also spent 120 hours on Dobbins's engagement. Print Done

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting An Integrative Approach

Authors: C J Mcnair Connoly, Kenneth Merchant

2nd Edition

099950049X, 978-0999500491

More Books

Students also viewed these Accounting questions