Kiwi Consulting Services provides consulting services throughout Australia and New Zealand. It uses a job costing system to accumulate the cost of client projects. Traceable costs are charged directly to individual clients; in contrast, other costs incurred by Kiwi but not identifiable with specific clients are charged to jobs by using a predetermined overhead rate. Clients are billed for directly chargeable costs, overhead and a markup for the profit margin. Kiwi's financial controller, Janet Campbell, anticipates the following costs for the coming year: Percentage of cost directly Cost traceable to clients Professional staff salaries $2 500 000 80% Administrative support staff 500 000 50% Travel 250 000 95% Photocopying 50 000 95% Other operating costs 100 000 50% Total $3 400 000The firm's management wishes to make an $850 000 profit for the firm and plans to add a percentage markup on total cost to achieve that figure. On 10 April, Kiwi completed work on a project for AdCom Manufacturing. The following costs were incurred: Cost Professional staff salaries $40 000 Administrative support staff 3 000 Travel 5 000 Photocopying 500 Other operating costs 1 5005-1"wa Page 230 Determine Kiwi's total traceable costs for the coming year and the firm's total anticipated overhead. Calculate the predetermined overhead rate, assuming the cost driver is traceable costs. What percentage of cost will Kiwi add to eachjob to achieve its prot target? Determine the total cost of the AdCom Manufacturing project How much would AdCom be billed for the services performed? lCompare this approach to the client billing system described in this chapter. Notice that only 50 per cent of Kiwi's other operating costs is directly traceable to specific client projects. Identify several costs that would be included in other operating costs and would be difcult to trace to clients' Notice that 80 per cent of the professional staff cost is directly traceable to specific client projects. Give several reasons that would explain why this figure isn't 100 per cent