The ProEngineer Ltd offers a range of engineering services. The company's service costing system estimates the cost of each engineering job by accumulating costs of the professional labour that works on the job plus a charge for overhead.

The professional labour is charged to jobs using the following rates:

Cost of labour (per hour)

Chargeout rate for billing system (per hour)

Engineer's assistant

$32

$82

Graduate engineer

$50

$210

Senior engineer

$155

$490

The predetermined overhead rate is based on professional labour costs, which are budgeted to be $332,000 for the current year.

The estimated overhead costs for the current year are budgeted to be:

Management salaries

$180,000

Salaries of clerical and reception staff

$110,000

Depreciation on IT hardware and software

$170,000

Stationery

$21,000

Telecommunications

$12,000

Insurance

$54,000

Depreciation on office fixtures and fittings

$7,500

Rent

$85,000

Electricity

$17,700

Council rates

$6,800

During May the company provided three services, which consumed the following quantities of professional labour (in hours):

Client

Engineer's assistant

Graduate engineer

Senior engineer

Smith and Sons

25

100

15

Jones and Partners

10

120

20

The Business Centre

35

90

10

Required:

1.Calculate the predetermined overhead rate to be used at The ProEngineer Ltd.

2.Calculate the cost of the three services.

3.Assume that The ProEngineer Ltd uses a billing system with the chargeout rates shown above. Calculate the client fees for each of the three services and profitability of each service.