Question

A1CS’s management wishes to make a profit of $1 250 000 for the firm and plans to add percentage markup on total cost to achieve that figure.
On 23 May, A1CS completed work on a project for Mango Manufacturing. The following costs were incurred:
Cost
Professional staff salaries
$55 000
Administrative support staff
5 000
Travel
6 000
Photocopying
1 200
Other operating costs
2 800
Note: If rounding off is required, round off your figures to 2 d.p.
Required:
1. Determine A1CS’s total traceable costs for the coming year and the firm’s total anticipated overhead.
2. Calculate the predetermined overhead rate, assuming the cost driver is traceable costs.
3. What percentage of cost will A1CS add to each job to achieve its profit target?
4. Determine the total cost of the Mango Manufacturing project.
5. How much Mango Manufacturing would be billed for the services performed
6. Compare the approach used in requirement 6 with client billing system described in Topic 8.
7. Only 75 per cent of A1CS’s other operating cost is directly traceable to specific client projects. Identify three costs that would be included in other operating costs and would be difficult to trace to clients.
8. 85 per cent of the professional staff cost is directly traceable to specific client projects. Give two reasons that would explain why this figure isn’t 100 per cent. (3 marks

Answer 1

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Explanation:

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