Mackinzie Consulting computes the cost of each consultingengagment by adding a portion of firmwide support costs to thelabor costs of the consultants on the engagment. The support costsare assigned to each consulting engagment using a cost driver ratebased on consulting labor costs. Mackinzie Consulting's supportcosts are $5 million per year, and total consultant labor cost isestimated at $2.5 million per year.
Questions:
1. What is Mackinzie Consulting's support costdriver rate?
2. If the consultant labor cost on an engagment is $25,000, whatcost will Mackinzie Consulting compute as the total costs of theconsulting engagment?