Tropico Services is a landscaping firm located in Nadi. The following costs were incurred in the firms contract to beautify the local hotels: Direct material $4 800 Professional labour $13 000 The firms budget for the year included the following estimates: Budgeted overhead $900 000 Budgeted professional labour $600 000

REQUIRED: Show ALL workings

1. Determine the annual budgeted overhead rate that will be used to apply overhead to contracts, based on the professional labour cost. Calculate the total cost of the firms contract to beautify the hotels. Materials are charged directly to each contract. Use the total cost to calculate a service fee, assuming that the company adds a 42 per cent profit margin to total cost.