Virginia Consultants employs 10 full-time management consultants. The budgeted annual compensation per employee is $75,000. The average time charged per client is 250 hours per year
The professional consultant labor costs are included in a single direct-cost category and they are allocated to jobs on a per-hour basis.
The other costs associated with the consultant firm are included in a single indirect-cost pool, allocated according to professional labor hours. The budgeted indirect costs for the year are $500,000, and the firm expects to have 50 new clients in the next year.
What is the budgeted direct-labor cost rate per hour?
A) $20 per hour.
B) $30 per hour.
C) $40 per hour.
D) $50 per hour.
E) $60 per hour.
E
Explanation: E) Total Direct Labor Cost = $75,000 × 10 = $750,000
Total Hours = 250 × 50 = 12,500 hours
Direct labor cost rate per hour = $750,000 / 12,500 hours = $60 hours
You might also like to view...
Bridge Company makes special equipment used in cell towers
Each unit sells for $410. Bridge uses just-in-time inventory procedures; it produces and sells 12,000 units per year. It has provided the following income statement data: Traditional Format Contribution Margin Format Sales revenue $4,920,000 Sales revenue $4,920,000 Cost of goods sold 2,900,000 Variable costs: Gross profit 2,020,000 Manufacturing 1,000,000 Selling & admin. expenses 650,000 Selling & admin. 400,000 Contribution margin 3,520,000 Fixed costs: Manufacturing 1,900,000 Selling & admin. 250,000 Operating income $1,370,000 Operating income $1,370,000 A foreign company has offered to buy 100 units for a reduced sales price of $300 per unit. The marketing manager says the sale will have no negative impact the company's regular sales. The sales manager says that this sale will not require any additional selling and administrative costs, as it is a one-time deal. The production manager reports that there is plenty of excess capacity to accommodate the deal without requiring any additional fixed costs. If Bridge accepts the deal, how will this impact operating income? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.) A) Operating income will increase by $29,917. B) Operating income will decrease by $29,917. C) Operating income will increase by $30,000. D) Operating income will decrease by $30,000.
If you're responding to a claim and your company is at fault, it is best to
A) avoid sympathizing with the customer, since it can lead to lawsuits. B) do all you can to discourage further correspondence. C) take (or assign) personal responsibility for setting matters straight. D) be vague about when the claim may be resolved. E) wait at least two weeks before you respond.