Question
Optimum applies all indirect operating costs (e.g., rent, utilities, and management salaries) as a percentage of the consultants labor cost. During the most recent year,
Optimum applies all indirect operating costs (e.g., rent, utilities, and management salaries) as a percentage of the consultants labor cost. During the most recent year, the firm estimated that it would pay $600,000 to its consultants and incur indirect operating costs of $1,170,000. Actual consultant labor costs were $645,000 and actual indirect operating costs were $1,145,000. During the year, Optimum provided 92 hours of consulting services to Robert Howard for which Optimum pays an average of $16 per hour. What is the total cost of providing services to Robert?
Optimum applies all indirect operating costs (e.g., rent, utilities, and management salaries) as a percentage of the consultants labor cost. During the most recent year, the firm estimated that it would pay $350,000 to its consultants and incur indirect operating costs of $490,000. Actual consultant labor costs were $376,250 and actual indirect operating costs were $465,000. What is the predetermined overhead rate that Optimum will use for the current year?
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