Question

McBride and Associates employs two professional appraisers, each having a different specialty. Debbie specializes in commercial appraisals and Tara specializes in residential appraisals. The company expects to incur total overhead costs of $208,260 during the year and applies overhead based on annual salary costs. The salaries and billable hours of the two appraisers are estimated to be as follows: Annual Salary Billable Hours Debbie $80,520 1,100 Tara $58,320 1,350 The accountant for McBride and Associates is computing the hourly rate that should be used to charge clients for Debbie and Tara's services. The hourly billing rate should be set to cover the total cost of services (salary plus overhead) plus a 25 percent markup. Required: 1. Compute the predetermined overhead rate. 2. Compute the hourly billing rate for Debbie and Tara. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the predetermined overhead rate. Predetermined Overhead Rate % of Salary Cost

Answer 1

As per HOMEWORKLIB POLICY only one answer should posted at a time. Please post other question separately. Here answering the first question below:

	Predetermined Overhead rate	=	150%
			Debbie	Tara
	Billing Rate		$                    228.75	$                         135
	Workings:
	Predetermined Overhead rate	=	[Total Overhead / Total Salary] X 100
		=	[$208260 / ($80520 + $58320)] X 100
		=	150%
			Debbie	Tara
(i)	Salary	=	$                    80,520	$                   58,320
(ii)	Overhead cost [(i) X 150%]	=	$                1,20,780	$                   87,480
(iii)	Total Cost [(i) + (ii)]	=	$                2,01,300	$               1,45,800
(iv)	Markup [(iii) X 25%]	=	$                    50,325	$                   36,450
(v)	Total Invoive cost [(iii) + (iv)]	=	$                2,51,625	$               1,82,250
(vi)	Billable hours	=	$                      1,100	$                     1,350
(vii)	Billing Rate [(v) / (vi)]	=	$                    228.75	$                         135