Mackenzie consulting computes the cost of each consulting, Ask an Expert

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Mackenzie Consulting computes the cost of each consulting engagement by adding a portion of firm wide support costs to the labor cost of the consults on the engagement. The support costs are assigned to each consulting engagement using a cost driver rate based on consultant labor costs. Mackenzie Consulting's support costs are $5 million per year, and total consultant labor cost is estimated at $2.5 million per year.

a. What is Mackenzie Consulting's support cost driver rate?

b. If the consultant labor cost on an engagement is $25,000, what cost will Mackenzie Consulting compute as the total cost of the consulting engagement?

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Accounting Basics, Accounting

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