In-Class Demos4_12

In-Class Demos4_12 - Demo Chapter 4 Exercise 4-2 B Direct...

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Unformatted text preview: Demo Chapter 4 Exercise 4-2 B Direct versus indirect costs LO 2 Kenta and Associates, LLP, is an accounting firm that provides two major types of professional services: (1) tax services as provided by the tax department and (2) auditing services as provided by the audit department. Each department has numerous clients. Engagement with each individual client is a separate service (i.e., product) and each department has several engagements in each period. Cost items of the firm follow: 1. Secretarial labor supporting both departments 2. Professional labor for an audit engagement 3. Depreciation of computers used in the audit department 4. Salary of the partner in charge of the tax department 5. Travel expenditures for an audit engagement 6. Salary of the partner in charge of the audit department 7. Salary of the managing partner of the firm 8. Cost of office supplies such as paper, pencils, erasers, etc. 9. Depreciation of computers used in the tax department 10. License fees of the firm 11. Professional labor for a tax engagement Required: Identify each cost as direct or indirect cost assuming the cost objects are the individual engagements (audit engagements or tax engagements ) . 1. Indirect 2. Direct 5. Direct 11. Direct 3. Indirect 4. Indirect 6. Indirect 7. Indirect 8. Indirect 9. Indirect 10. Indirect Exercise 4-2 B Direct versus indirect costs LO 2 Kenta and Associates, LLP, is an accounting firm that provides two major types of professional services: (1) tax services as provided by the tax department and (2) auditing services as provided by the audit department. Each department has numerous clients. Engagement with each individual client is a separate service (i.e., product) and each department has several engagements in each period. Cost items of the firm follow: 1. Secretarial labor supporting both departments 2. Professional labor for an audit engagement 3. Depreciation of computers used in the audit department 4. Salary of the partner in charge of the tax department 5. Travel expenditures for an audit engagement 6. Salary of the partner in charge of the audit department 7. Salary of the managing partner of the firm 8. Cost of office supplies such as paper, pencils, erasers, etc. 9. Depreciation of computers used in the tax department 10. License fees of the firm 11. Professional labor for a tax engagement Required: b. Identify each cost as being a direct or indirect cost assuming the cost objects are the two departments. 1. Indirect 2. Direct 5. Direct 11. Direct 3. Direct 4.Direct 6. Direct 7. Indirect 8. Indirect 9. Direct 10. Indirect Exercise 4-2 B Direct versus indirect costs LO 2 Kenta and Associates, LLP, is an accounting firm that provides two major types of professional services: (1) tax services as provided by the tax department and (2) auditing services as provided by the audit department. Each department has numerous clients....
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In-Class Demos4_12 - Demo Chapter 4 Exercise 4-2 B Direct...

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