Spicer and Rabbit calculate a predetermined overhead rate to cover support staff salaries, office rent, utilities and telecommunications costs, marketing costs and other costs of running the firm. Professional labour costs make up about 75 per cent of the firm’s total operating costs. The anticipated overhead cost for the current year is $4 000 000.
Calculate the predetermined overhead rate per dollar of professional labour.
Explain how the firm can justify using a single overhead rate to cost each case.
Use the information in the time sheets to prepare a client cost sheet for the Jazz Industries investigation, similar to that in Exhibit 6.8.
Determine the total cost of the investigation.
Langfield-Smith, Kim, David Smith, Paul Andon, Ronald Hilton, Helen Thorne. Management Accounting: Information for creating and managing value, 8th Edition, 8th Edition. McGraw-Hill Australia, 11/2017. VitalBook file.
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