Groot Promotional Services uses a job order system for costing and billing promo
ID: 2427868 • Letter: G
Question
Groot Promotional Services uses a job order system for costing and billing promotional services for dance and ballet performances. Groot has four public relations specialists plus an office staff. At the beginning of the year, Groot estimated the total cost of salaries and benefits for the public relations specialists at $658,000 and a total of 7,000 billable hours for the year. All remaining office and administrative costs were estimated at $392,000. The allocation base for office and administrative costs is billable hours. In June, Groot signed a contract for a Russian ballet performance. It estimated the new contract would require 34 hours of specialist time. What is the total cost estimate for this contract?
a) $5,100
b) $3,196
c) $1,904
d) $1,292
Explanation / Answer
Total cost per billable hour = ( Salary & Benefits + Office & Admin costs) / Billable hours
= ( 658000 + 392000) / 7000 = $150
Total cost estimate for 34 hours = 34 * 150 = $ 5100
Correct chocie: A
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