Question
Question Best Talents Pte Ltd is a human resource management consulting firm that specializes in recruiting senior management staff on behalf of its clients. The
Question
Best Talents Pte Ltd is a human resource management consulting firm that specializes in recruiting senior management staff on behalf of its clients. The fee charged to employ aperson is set at 50% of the first years remuneration package for the person being employed. Best Talents Pte Ltd employs job order costing to work out the profitability of each job. The firm charges direct labour, advertising costs, travel costs and any other costs directly traceable to the job. Best Talents Pte Ltd also allocates its overhead coststo jobs at a rate based on the first years remuneration package for the person beingemployed.
Best Talents Pte Ltd expects to successfully recruit 220 managers for its clients in the coming year with an average remuneration package of $150,000.
Operating expenses budget for the coming year: $1,818,000
Recruitment consultants salaries and benefits $1,240,000
Secretarial and other staff salaries $120,000
Information technology costs $60,000
Printing, telephone, postage, stationery $25,000
Advertising $240,000
Insurance $21,000
Legal support $52,000
Other overheads $60,000
Additional information:
(i) It is estimated that only 75% of the total hours worked by the recruitment consultants and 30% of the total hours worked by the other staff are assigned directly to the client jobs. The balance of the time are spent on general administrative tasks.
(ii) 80% of the advertising expenses are estimated to be job related. The balance 20% are related to advertisement to promote the firm
(iii) All other expenses are not job-related.
Required
(a) Calculate the pre-determined overhead rate for Best Talents Pte Ltd.
(b) Albert Tan, a senior consultant has just successfully recruited a new manager for CandidCommunications Ltd on a first years remuneration package of $180,000. Albert Tanssalary is $96,000 plus 20% benefits. He has charged the past 4 month of his time to this job. Other direct expenses traceable to the job were $15,000. Compute the profit for this job.
(c) During the year, Best Talents Pte Ltd recruited managers for clients with the total remuneration packages of $28.6 million. Calculate the overhead variance for the year if the actual overhead is $555,100.
(d) Normal costing system which uses pre-dertermined is widely used. State the difference between actual costing and normal costing. Explain why normal costimng is widely used.
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