Question 3 (7 marks)

a) Which of the following are likely to use service costing? Justify your answer in each case.

(3 marks)

(i) A college

(ii) A hotel

(iii) A plumber

b) The following information relates to a management consultancy organisation:

$

Salary cost per hour for senior consultants 40

Salary cost per hour for junior consultants 25

Overhead absorption rate per hour applied to all hours 20

The organisation adds 40% to total cost to arrive at the final fee to be charged to a client.

Client number 209 took 54 hours of a senior consultant's time and 110 hours of junior consultants' time.

Required: What is the final fee to be charged for Client number 209?