Cost pool cost allocation base direct cost indirect

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COSTPOOLCOSTALLOCATIONBASE}}}}DIRECTCOSTIndirect CostsDirect CostsProfessionalLabor2. Budgeted professionallabor-hour direct cost rate= Budgeted direct labor compensation per professionalBudgeted direct labor-hours per professional= $104,0001,600 hours= $65 per professional labor-hour Note that the budgeted professional labor-hour direct-cost rate can also be calculated by dividing total budgeted professional labor costs of $2,600,000 ($104,000 per professional ×25 professionals) by total budgeted professional labor-hours of 40,000 (1,600 hours per professional ×25 professionals), $2,600,000 ÷40,000 = $65 per professional labor-hour. Budgeted indirectcost rate= Budgeted total costs in indirect cost poolBudgeted total professional labor-hours= 25hours1,600$2,200,000×= $2,200,00040,000 hours= $55 per professional labor-hour 4. Richardson Punch Direct costs: Professional labor, $65 ×100; $65 ×150 Indirect costs: Legal support, $55 ×100; $55 ×150$ 6,500 5,500 $12,000 $ 9,750 8,250 $18,000 3.
4-26 4-33 (25–30 min.)Service industry, job costing, two direct- and indirect-cost categories, law firm (continuation of 4-32). Although not required, the following overview diagram is helpful to understand Keating’s job-costing system. 1. Professional Partner Labor Professional Associate Labor Budgeted compensation per professional Divided by budgeted hours of billable time per professional Budgeted direct-cost rate $ 200,000 ÷1,600 $125 per hour*$80,000 ÷1,600 $50 per hour*Can also be calculated asTotal budgeted partner labor costsTotal budgeted partner labor - hours= $200,000 51,600 5××= 000,8$1,000,000= $125 Can also be calculated asTotal budgeted associate labor costsTotal budgeted associate labor - hours= $80,000 201,600 20××= $1,600,00032 000,= $ 502. General Support Secretarial Support Budgeted total costs Divided by budgeted quantity of allocation base Budgeted indirect cost rate $1,800,000 ÷ 40,000 hours $45 per hour $400,000 ÷ 8,000 hours $50 per hour ProfessionalLabor-HoursGeneralSupportCOST OBJECT:JOB FORCLIENTINDIRECTCOSTPOOLCOSTALLOCATIONBASE}}}}DIRECTCOSTIndirect CostsDirect CostsPartnerLabor-HoursSecretarialSupportProfessionalAssociate LaborProfessionalPartner Labor
4-27 3. Richardson Punch Direct costs: Professional partners, $125 ×60; $125 ×Professional associates, $50 ×40; $50 ×120 Direct costs Indirect costs: General support, $45 ×100; $45 ×150 Secretarial support, $50 ×60; $50 ×Indirect costs Total costs $7,500 2,000 $ 9,500 4,500 3,000 7,500 $17,000 $3,750 6,000 $ 9,750 6,750 1,500 8,250 $18,000 4. Richardson Punch Single direct - Single indirect (from Problem 4-32) Multiple direct – Multiple indirect (from requirement 3 of Problem 4-33) Difference $12,000 17,000 $ 5,000 undercosted $18,000 18,000 $ no change The Richardson and Punch jobs differ in their use of resources. The Richardson job has a mix of 60% partners and 40% associates, while Punch has a mix of 20% partners and 80% associates. Thus, the Richardson job is a relatively high user of the more costly partner-related resources (both direct partner costs and indirect partner secretarial support). The refined-costing system in Problem 4-32 increases the reported cost in Problem 4-32 for the Richardson job by 41.7% (from $12,000 to $17,000).
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4-28 4-34 (2025 min.) Proration of overhead. 1. Budgeted manufacturing overhead rate is $4,800,000 ÷ 80,000 hours = $60 per machine-hour. 2. Manufacturing overhead

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