Trantham Company is a management consulting firm. The company expects to incur $

Question

Trantham Company is a management consulting firm. The company expects to incur $120,000 of indirect costs this year. Indirect costs are allocated based on the following activities EEB (Click the icon to view the activiies.) k the icon to view additional information.) Data Table Determine the total cost of the consulting job and the operating income eaned. Predetermined Begin by selecting the formula to compute the allocated overhead (OH) cost. Quantity of Allocation Base 700 visits 3,600 pages Estimated Activity Base Allocation Rate S 120 per visit 10 per page Cost - overhead costs 84,000 Number of visits 36,000 120,000 Site visits Compute the total allocated overhead cost of the job Number of pages Allocated Total indirect costs Activity overhead costs Site visits More Info Total Now calculate the total cost of the consulting job. Trantham bills clients at 150% of the direct labor costs. The company has estimated direct labor costs at $270 per hour. Last month, Trantham completed a consulting job for Client 76 and used the following resources: Allocation Base Direct labor hours Visits Pages Client 76 Total cost of job 90 The operating income earned on the consulting job amounts to S 45 Choose from any list or enter any number in the input fields and then continue to the next question. PrintDone Save for Later

Explanation / Answer

Allocated Overhead Costs = Overhead allocation rate X Actual number of cost driver units

Allocation of Overhead cost of the job Activity Allocated overhead Costs Site Visits (6 X120) 720 Document Preparation (45 X10) 450 Total 1,170 Total Cost of the consulting job Direct Labor Cost (90*270)           24,300 Overhead Costs             1,170 Total Cost the job           25,470 Consulting Revenue (24300*150%)           36,450 Total Cost the job           25,470 Operating Income on the consulting Job           10,980

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