Question
Rouse Consulting computes the cost of each consulting engagement by adding a portion of firmwide overhead costs to the labor cost of the consultants on
Rouse Consulting computes the cost of each consulting engagement by adding a portion of firmwide overhead costs to the labor cost of the consultants on the engagement. The overhead costs are assigned to each consulting engagement using a cost driver rate based on consultant labor costs. Rouse Consulting's overhead costs are $5.2 million per year, and total consultant labor cost is estimated at $2.6 million per year.
Requirements
(a) What is RouseRouse Consulting's cost driver rate?
(b) If the consultant labor cost on an engagement is $32,000, what cost will RouseRouse Consulting compute as the total cost of the consulting engagement?
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