Wardlaw Company, ( It is the same company!) a mid-sized engineering firm operates in mid-town Toronto from a suite of offices on the fifth floor of a high-rise office building. All professional personnel – Engineers, Computer Specialists, Surveyors, Managerial/Tax Accountants, Sales and Admin personnel are on fixed salary – Annual Payroll, all fixed .

Fixed Costs:

Rent: 10,000 Sq Meters $ 8,250,000

Salaries all fixed: 30,000,000 Engineering/Survey

Equipment 1,250,000

Marketing – Professional/Industry journals 750,000

Computers - Hardware 8,750,000

Annual Variable Costs include:

Marketing/Travel - Client focused $1,300,000

Blueprinting/Design- Job Specific $2,450,000

Other Supplies $1,250,000

Software $1,285,000

Wardlaw has hired your managerial accounting firm to design a Project Management System. Required: Suggest methods for charging both fixed and Variable costs. Your answer must address –

Cost behavior:

• Cost drivers 

• Direct Costs 

• Indirect Costs 

• Client Profile – Large vs small 

• Client-focused charges 

• Distance/mileage charges Non-financial: 

• Identify Non-financial issues to be considered

Answer rating: 100% (QA)

When determining how to charge both fixed and variable costs there are a few things to consider Fixed costs are those that do not change with activity ... View the full answer