JLR Enterprises provides consulting services throughout California and uses a job-order costing system to accumulate the cost of client projects. Traceable costs are charged directly to individual clients; in contrast, other costs incurred by JLR, but not identifiable with specific clients, are charged to jobs by using a predetermined overhead application rate. Clients are billed for directly chargeable costs, overhead, and a markup.

JLRs director of cost management, Brent Dean, anticipates the following costs for the upcoming year:

		Cost		Percentage of Cost Directly Traceable to Clients
Professional staff salaries	$	2,500,000		80%
Administrative support staff		300,000		60%
Travel		250,000		90%
Photocopying		50,000		90%
Other operating costs		100,000		50%
Total	$	3,200,000

The firms partners desire to make a $640,000 profit for the firm and plan to add a percentage markup on total cost to achieve that figure.

On March 10, JLR completed work on a project for Martin Manufacturing. The following costs were incurred: professional staff salaries, $41,000; administrative support staff, $2,600; travel, $4,500; photocopying, $500; and other operating costs, $1,400.

1- Determine JLRs total traceable costs for the upcoming year and the firms total anticipated overhead.

2- Calculate the predetermined overhead rate. The rate is based on total costs traceable to client jobs.

3- What percentage of

4- Determine the total cost of the Martin Manufacturing project. How much would Martin be billed for services performed?

cost will JLR add to each job to achieve its profit target?

4-