JLR Enterprises provides consulting services throughout California and uses a job-order costing

JLR Enterprises provides consulting services throughout California and uses a job-order costing

JLR Enterprises provides consulting services throughout California and uses a job-order costing system to accumulate the cost of client projects. Traceable costs are charged directly to individual clients; in contrast, other costs incurred by JLR, but not identifiable with specific clients, are charged to jobs by using a predetermined overhead application rate. Clients are billed for directly chargeable costs, overhead, and a markup. JLRs director of cost management, Brent Dean, anticipates the following costs for the upcoming year: Cost Professional staff salaries Administrative support staff Travel Photocopying Other operating costs

JLR Enterprises provides consulting services throughout California and uses a job-order costing system to accumulate the cost of client projects. Traceable costs are charged directly to individual clients; in contrast, other costs incurred by JLR, but not identifiable with specific clients, are charged to jobs by using a predetermined overhead application rate. Clients are billed for directly chargeable costs, overhead, and a markup.

JLR’s director of cost management, Brent Dean, anticipates the following costs for the upcoming year:

 

	Cost	Percentage of Cost Directly Traceable to Client
Professional staff salaries	$2,500,000	80%
Administrative support staff	300,000	60%
Travel	250,000	90%
Photocopying	50,000	90%
Other operating costs	100,000	50%
Total	$3,200,000

 

The firm’s partners desire to make a $640,000 profit for the firm and plan to add a percentage markup on total cost to achieve that figure.

On March 10, JLR completed work on a project for Martin Manufacturing. The following costs were incurred: professional staff salaries, $41,000; administrative support staff, $2,600; travel, $4,500; photocopying, $500; and other operating costs, $1,400.

 

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Calculate the predetermined overhead rate. The rate is based on total costs traceable to client jobs.(Omit the “%” sign in your response.)

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