Ryan & Marks, Design Consultants, Has the Following Budget for the Year

question 23

Essay

Ryan & Marks, Design Consultants, has the following budget for the year:
$$\begin{array} { l r } \text { Direct labor (for professional hours charged to clients) } & \$ 202,000 \\\text { Overhead } & \\\text { Indirect materials } &10,000 \\ \text { Indirect labor } & 150,000 \\\text { Depreciation - Building } &50,000 \\\text { Depreciation - Furniture } & 5,000 \\\text { Utilities } &12,000 \\\text { Insurance } &4,800 \\\text { Property taxes } & 5,200 \\\text { Other expenses } &\underline{ 3,380}\\\text { Total } & \underline{ \$ 240,380}\end{array}$$
The firm uses direct labor as the cost driver to apply overhead to clients. During January, the firm worked for many clients; data for two of them follow:
$\begin{array}{llr} \text {Henderson account: } &\\ \text { Direct materials } &\$400\\ \text { Direct labor } &3,000\\ \text { Fisher account:} &\\ \text { Direct materials} &\$5,380\\ \text { Direct labor } &12,600\\\end{array}$

Required:
(a) Compute the company'sRyan & Marks budgeted overhead rate. Explain how this is used.
(b) Compute the amount of overhead to be charged to the Henderson and Fisher accounts using the predetermined overhead rate calculated in requirement (a).
(c) Compute the separate job cost for the Henderson and Fisher accounts.

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