Response to the following problem:
The following information is available for a particular consulting contract performed by Newland Business Consultants in 2012:
Consulting labor costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,000
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
Total cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ?
Newland applies overhead on the basis of client consulting hours. The estimated total overhead costs for 2012 are $6.2 million, and the estimated total consulting hours are 150,000. Newland pays its consultants $40 per hour.
1. Compute the predetermined overhead rate.
2. What are the allocated overhead cost and the total cost of this particular contract?