The Mad-Fly Agency provides consulting services to a variety of clients across the country. The agency accumulates costs for each consulting project on the basis of direct labor costs and allocated overhead costs. Mad-Fly’s estimated direct labor and overhead costs for the year are as follows:

Mad-Fly allocates overhead costs to individual jobs based on the total estimated direct labor hours of its professional services staff.

a. Determine Mad-Fly’s estimated predetermined overhead rate for the year.

b. Mad-Fly started and completed a consulting job for MT Industries during the year (Job 402).
The job required 200 direct labor hours of professional staff. Determine the cost of the MT Industries job.

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Direct labor hours (professional staff) Hourly rate for professional staff Estimated total overhead costs 20,000 hours $180 per hour $1,200,000