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TSB Enterprises provides consulting services and uses a job costing system to accumulate the cost of client projects. Traceable costs are charged directly to individual clients. Other costs incurred by TSB that are not identifiable with specific clients are charged to jobs by using a pre-determined overhead application rate. Clients are billed for directly chargeable costs, overhead, and a markup. TSBs vice-president of cost management, Willey Wonka, anticipates the following costs for the upcoming year: Cost Percentage of Cost Directly Traceable to Clients Professional staff salaries $2,500,000 80% Administrative support staff 300,000 60% Photocopying 50,000 90% Travel 250,000 90% Other operating costs 100,000 50% Total $3,200,000 The firms partners want to make a profit of $640,000 for the firm and plan to add a percentage markup on total costs to achieve the $640,000 target profit. Om March 10, TSB completed consulting work for Ace Manufacturing. The following costs were incurred relative to the Ace Manufacturing consulting work: Professional staff salaries: $41,000 Administrative support staff: $2,600 Photocopying: $500 Travel: $4,500 Other operating costs: $1,400 Required:

a) Determine TSBs total traceable costs for the upcoming year and the firms total anticipated overhead.

b) Calculate the predetermined overhead rate. The rate is based on total costs traceable to client jobs.

c) What percentage of cost will TSB add to each job to achieve its target profit of $640,000?

d) Determine the total cost of the ACE Manufacturing project. How much would ACE be billed for services performed?

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