McBride and Accociates cmplays two profcssional appraisers, cach having a differ
ID: 2332047 • Letter: M
Question
McBride and Accociates cmplays two profcssional appraisers, cach having a different spccialty. Dcbbic specializes in commercial appraisals and Tara specializes in residential appraizals. The company expects to incur total cverhead coets of $299,610 during thc year and applics overhead based on annualslry T salary costs. Tha salarias and bilabla hours of the t two appraisers are estimated to be as folows: rrual Salary illabla Hours 126 480 $73,260 1,700 1,650 The accuntant for McBride and Associales is computing the hourly rale thal should be used lo charge cients lor Deibie and Tara's services. The hourly biling ralte should be set lo cuver lhe toal cstf services (salary pius overhead) pius 25 percentmarkup. 1 Compute the predetermined overhead rate. Rata % of Salary Cost 2. Compute tha hourly hiling rate for Dahhia and Tara (Do nat round your intemediate caleulations, and round your final answers to 2 decimal places) Debbie Tara Biling RaleExplanation / Answer
Answer to Part 1.
Predetermined Overhead Rate = Estimated Manufacturing Costs / Total Annual Salary
Total Annual Salary = $126,480 + $73,260
Total Annual Salary = $199,740
Predetermined Overhead Rate = 299,610 / 199,740
Predetermined Overhead Rate = 150% of Salary Cost
Answer to Part 2.
Debbie:
Total Cost of Service = $126,480 + ($126,480 * 150%)
Total Cost of Service = $316,200
Service Cost per Billable Hour = 316,200 / 1,700
Service Cost per Billable Hour = $186
Billing Rate = $186 + ($186 * 25%)
Billing Rate = $232.50 per Hour
Tara:
Total Cost of Service = $73,260 + ($73,260 * 150%)
Total Cost of Service = $183,150
Service Cost per Billable Hour = 183,150 / 1,650
Service Cost per Billable Hour = $111
Billing Rate = $111 + ($111 * 25%)
Billing Rate = $138.75 per Hour