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?