Quinn Consulting Limited Provides Consulting Services and Uses a Job-Order

question 28

Essay

Quinn Consulting Limited provides consulting services and uses a job-order system to accumulate the cost of client projects. Traceable costs are charged directly to individual clients; in contrast, other costs incurred by Quinn, 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.
Quinn anticipates the following costs for the upcoming year: $\begin{array}{lcc}&&\text { Percentage of Cost } \\&&\text { Directly Attributable }\\&\underline{ \text { Cost } } &\underline{ \text { To Clients } } \\\text { Professional staff salaries } & \$ 5,000,000 & \$ 80 \% \\\text { Administrative support staff } & 600,000 & 50 \% \\\text { Travel } & 200,000 & 80 \% \\\text { Other operating costs } & \underline { 200,000 } & 20 \%\\\text { Total } & \underline { \$ 6,000,000 } \\\end{array}$ Quinn's partners desire to make a $580,000 profit for the firm and plan to add a percentage markup on total cost to achieve that figure.
On June 30^th, Quinn completed work on a project for Findley Manufacturing. The following costs were incurred: professional staff salaries, $70,000; administrative support staff, $10,000; travel, $11,000; and other operating costs, $2,000.
Required:
A. Determine Quinn's total traceable costs for the upcoming year and the firm's total anticipated overhead.
B. Calculate the predetermined overhead rate. The rate is based on total costs traceable to client jobs.
C. What percentage of total cost will Quinn add to each job to achieve its profit target?
D. Determine the total cost of the Findley Manufacturing project. How much would be billed to Findley for services performed?

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Definitions:

Economic Growth

An increase in the amount of goods and services produced per head of the population over a period of time.

Population Density

The number of individuals living in a given area, typically expressed as persons per square kilometer or square mile.

Fertility Rates

The average number of children that would be born per woman over her lifetime within a certain population.

Peasant Agriculture

A type of small-scale agriculture focusing on self-sufficiency and typically operated by families or small communities.