Ace Architects Employs Two Architects,each Having a Different Area of Specialization.Caitlin

question 18

Essay

Ace Architects employs two architects,each having a different area of specialization.Caitlin specializes in industrial commercial construction and Zachary specializes in residential construction.Ace expects to incur total overhead costs of $779,625 during the year and applies overhead based on annual salary costs.Caitlin is a senior partner,her annual salary is $168,750,and she is expected to bill 2,000 hours during the year.Zachary is a senior associate,his annual salary is $91,125,and he is expected to bill 1,800 hours during the year.
a.Calculate the predetermined overhead rate.
b.Assuming that the hourly billing rate should be set to cover the total cost of services plus a 20% markup,compute the hourly billing rates for Caitlin and Zachary.

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Definitions:

Future Price

The anticipated cost or value of a good, security, or commodity at a specified future date, often used in the context of futures trading.

Downsloping Demand

This term illustrates a standard economic theory where the demand curve slopes downward, indicating that as the price decreases, the quantity demanded increases.

Upsloping Supply

Refers to a supply curve that slopes upwards, indicating that higher prices lead to a higher quantity supplied.

Excise Tax

A tax levied on specific goods or services, such as alcohol or gasoline, usually to discourage their consumption or to raise revenue for public purposes.