EmployUs Pty Ltd is a human resource management firm that specialises in employing middle to senior management staff on behalf of other firms. The charge to employ a person is set at 50% of the first year’s remuneration package for the person being employed. To work out the profitability of each job, EmployUs Pty Ltd charges direct labour, advertising costs, travel costs and any other costs directly traceable to the job. The firm also allocates its overhead costs to jobs based on the first year’s remuneration of the person being employed.

EmployUs Pty Ltd expects to successfully employ 200 managers on behalf of its clients in the coming year with an average remuneration package of $150000.

Estimated overheads are:

Human resource staff indirect time Secretarial services Information technology costs Printing, telephone, postage, stationery Advertising EmployUs Insurance Legal support Other overheads

$140 000 60 000 30 000 15 000 20 000 57 500 52 500 37 500

Required

A. Calculate the application rate for the firm’s overheads. (Ignore GST.)

B. Brianna has just successfully employed a new executive manager for Carbone Ltd. on a first year’s remuneration package of $200 000. Brianna is on an $80 000 salary plus 30% on-costs and she estimates that she has spent the equivalent of 3 months employing the new executive. Calculate the profit that EmployUs would attribute to this job.

C. During the year EmployUs Pty Ltd employed managers for clients with total remuneration packages of $25 million. Will EmployUs Pty Ltd have over applied or under applied overhead for the year?