Rouse Consulting computes the cost of each consulting engagement by adding a portion of firmwide overhead costs to the labor cost of the consultants on the engagement. The overhead costs are assigned to each consulting engagement using a cost driver rate based on consultant labor costs. Rouse Consulting’s overhead costs are $5.2 million per year, and total consultant labor cost is estimated at $2.6 million per year.

Requirements

(a) What is RouseRouse Consulting’s cost driver rate?

(b) If the consultant labor cost on an engagement is $32,000 , what cost will RouseRouse Consulting compute as the total cost of the consulting engagement?