Western, Inc. is a technology consulting firm focused on Web site development and integration of Internet business applications. The president of the company expects to incur $640,000 of indirect costs this year, and she expects her firm to work 4,000 direct labor hours. Western’s systems consultants provide direct labor at a rate of $280 per hour. Clients are billed at 160% of direct labor cost. Last month, Western’s consultants spent 170 hours on Halbert’s engagement.
Requirements
- 1. Compute Western’s predetermined overhead allocation rate per direct labor hour.
- 2. Compute the total cost assigned to the Halbert engagement.
- 3. Compute the operating income from the Halbert engagement.
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