JLR Enterprises provides consulting services throughout California and uses job-order costing system to accumulate the cost of client projects. In contrast, other costs incurred by JLT, but not identifiable with specific clients are charged to jobs using a predetermined overhead application rate. Clients are billed directly for chargeable costs, overhead, and a markup. JLR's 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 firm desires to make a $640,000 profit for the firm and adds a percentage markup on total cost to achieve that figure.

During the year, JLR completed work on a project for Remco Inc. The following costs were directly recorded for this project: professional staff salaries, $41,000; administrative support staff, $2,600; travel, $4,500; photocopying, $500; and other operating costs, $1,400.

Needs

1.Determine JLR's total traceable costs for the upcoming year and the firm's total anticipated overhead

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

3.What percentage of cost will JLR add to each job to achieve its profit target?

4.Determine the total cost of the Remco project. How much would Remco be billed for service provided?