Problems 1. Eye for Detail is an interior decorating firm located in Sydney. The following costs were incurred in the firm's contract to redecorate the local council offices: Direct material $ 5 600 Professional labour 12 000 The firm's budget for the year included the following estimates: Budgeted overhead $800 000 Budgeted professional labour 500 000 Required: a) Calculate the total cost of the firm's contract to redecorate the council offices. Overhead is applied to contracts using a predetermined overhead rate, calculated annually, based on the professional labour cost. Materials are charged directly tot each contract. b) Use the total cost to calculate a service fee, assuming that the company adds a 40 percent profit margin to total cost. c) Calculate the fee charged to redecorate the council offices, assuming that the firm uses a chargeout rate of $360 per professional labour hour (which includes a profit margin of 40 percent) and 120 hours are worked on this contract. Materials are charged to the client at cost. d) Explain the key differences between the methods used in b) and c) for estimating client fees. e) Which method would you recommend for estimating client fees