The consulting firm CMA Financial employs 40 full-time staff. The estimated compensation per employee is $105,000 for 1,750 hours. It charges all direct labour costs to clients. It includes any other costs in a single indirect cost pool and allocates them based on labour hours. Actual indirect costs were $850,000. Estimated indirect costs for the coming year are $1.4 million. The firm expects to have 60 clients in the coming year.
Instructions
(a) Determine overhead rate per direct labour hour.
(b) Determine the direct labour rate per hour.
(c) Calculate the total cost of a job that will take 270 direct labour hours, using a normal cost system.