Required information [The following information applies to the questions displayed below.] JLR Enterprises provides consulting services throughout California and uses a job-order costing system to accumulate the cost of client projects. Traceable costs are charged directly to individual clients; in contrast, other costs incurred by JLR, but not identifiable with specific clients, are charged to jobs by using a predetermined overhead application rate. Clients are billed for directly chargeable costs, overhead, and a markup. JLR's director of cost management, Victor Anthony, anticipates the following costs for the upcoming year: Percentage of Cost Directly Traceable to Clients 80% 60% 90% 90% 50% Type Professional staff salaries Administrative support staff Travel Photocopying Other operating costs Total Cost $ 2,500,000 300,000 250,000 50,000 100,000 $ 3,200,000 The firm's partners desire to make a $640,000 profit for the firm and plan to add a percentage markup on total cost to achieve that figure. On March 10, JLR completed work on a project for Martin Manufacturing. The following costs were incurred: professional staff salaries, $41,000; administrative support staff, $2,600; travel, $4,500; photocopying, $500; and other operating costs, $1,400. Calculate the predetermined overhead rate. The rate is based on total costs traceable to client jobs. Predetermined overhead rate

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Required information
[The following information applies to the questions displayed below.]
JLR Enterprises provides consulting services throughout California and uses a job-order costing system to accumulate the
cost of client projects. Traceable costs are charged directly to individual clients; in contrast, other costs incurred by JLR,
but not identifiable with specific clients, are charged to jobs by using a predetermined overhead application rate. Clients
are billed for directly chargeable costs, overhead, and a markup.
JLR's director of cost management, Victor Anthony, anticipates the following costs for the upcoming year:
Percentage of Cost
Directly Traceable to
Clients
80%
60%
90%
90%
50%
Type
Professional staff salaries
Administrative support staff
Travel
Photocopying
Other operating costs
Total
Cost
$ 2,500,000
300,000
250,000
50,000
100,000
$ 3,200,000
The firm's partners desire to make a $640,000 profit for the firm and plan to add a percentage markup on total cost to
achieve that figure.
On March 10, JLR completed work on a project for Martin Manufacturing. The following costs were incurred: professional
staff salaries, $41,000; administrative support staff, $2,600; travel, $4,500; photocopying, $500; and other operating costs,
$1,400.
2. Calculate the predetermined overhead rate. The rate is based on total costs traceable to client jobs.
Predetermined overhead rate
%
Transcribed Image Text:! Required information [The following information applies to the questions displayed below.] JLR Enterprises provides consulting services throughout California and uses a job-order costing system to accumulate the cost of client projects. Traceable costs are charged directly to individual clients; in contrast, other costs incurred by JLR, but not identifiable with specific clients, are charged to jobs by using a predetermined overhead application rate. Clients are billed for directly chargeable costs, overhead, and a markup. JLR's director of cost management, Victor Anthony, anticipates the following costs for the upcoming year: Percentage of Cost Directly Traceable to Clients 80% 60% 90% 90% 50% Type Professional staff salaries Administrative support staff Travel Photocopying Other operating costs Total Cost $ 2,500,000 300,000 250,000 50,000 100,000 $ 3,200,000 The firm's partners desire to make a $640,000 profit for the firm and plan to add a percentage markup on total cost to achieve that figure. On March 10, JLR completed work on a project for Martin Manufacturing. The following costs were incurred: professional staff salaries, $41,000; administrative support staff, $2,600; travel, $4,500; photocopying, $500; and other operating costs, $1,400. 2. Calculate the predetermined overhead rate. The rate is based on total costs traceable to client jobs. Predetermined overhead rate %
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