Problem 3-47 Job-Order Costing in a Consulting Firm (LO 3-1, 3-2, 3-4, 3-8) [The following information applies to the questions displayed below.) 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. JLR's director of cost management, Brent Dean, anticipates the following costs for the upcoming year: Percentage of Cost Directly Traceable to clients 79% 60% 90% 90% 75% Cost $ 2,500,000 300,000 250,000 50,000 100,000 $ 3,200,000 Professional staff salaries Administrative support staff Travel Photocopying Other operating costs Total The firm's partners desire to make a $640,000 profit for the firm and plan to add a percentage markup on total cost to achieve that fiqure. The firm's 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. Problem 3-47 Part 1 Required: 1. Determine JLR's total traceable costs for the upcoming year and the firm's total anticipated overhead. Total traceable costs Total anticipated overhead Problem 3-47 Part 2 2. Calculate the predetermined overhead rate. The rate is based on total costs traceable to client jobs. Predetermined overhead rate % Problem 3-47 Part 3 3. What percentage of cost will JLR add to each job to achieve its profit target? Target profit percentage % Problem 3-47 Part 4 4. Determine the total cost of the Martin Manufacturing project. How much would Martin be billed for services performed? Total cost of Martin Mfg. Project Billing to Martin Notice that only 75 percent of JLR's other operating cost is directly traceable to specific client projects. Cite several costs that would be included in this category and difficult to trace to clients. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) ? Direct labor ? Rent Direct material Top management salaries 2 Utilities Depreciation Manufacturing overhead 2 Advertising 2 Insurance
