The parnters of Trebbi and Schertzer a security services firm, decide to implement an activity-based costing system. They identify the following three cost pools and budgeted amounts for each for the coming year:
Fringe benefits...................$140,000
Technology support.............$80,000
Research support..............$300,000
It is determined that the best cost driver for fringe benefits is professional labor dollars, technology support is partner labor hurs, and research support is professional labor hours. The two partners have budgeted salaries and billable hours of $150,000 and 1,500 billable hours each for the coming year. There are also 8 investigators earning $50,000 and having 1,500 billable hours each.
Required: Compute the budgeted overhead rate for each of the three cost pools.