Question

Thompson company is a consulting firm and applies indirect overhead costs based on billing hours. the firm expects to have $7,700 in indirect costs during the year and bill customers for 700 hours. the cost of direct labor is $60 per hour. thompson company completed a consulting job for joe lock and billed the customer for 20 hours. what was the total cost of the consulting job?

Answer 1

The total cost of the consulting job = (Indirect cost per hour + Direct cost per hour ) * Total hours

The total cost of the consulting job = ( $11 per hour + $60 per hour ) * 20 hours

= $ 71 * 20 = $ 1,420

Here , the Indirect cost per hour is $ 11 ( 7,700 / 700 )

Direct cost per hour is $ 60

And the total number of hours billed is 20