Acme Consulting uses job order costing to determine the cost of services provided to clients. For a particular year, Acme has budgeted the following amounts: Office rent and utilities $100,000 Support staff $70,000 Advertising $25,000 Supplies $5,000 Direct labor (based on 2.000 hours) $120,000 The firm has completed job 101 for a client. Job 101 involved 25 hours of direct labor. Acme assigns indirect costs based on direct labor hours. What is the cost of job 101?
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Acme Consulting uses job order costing to determine the cost of services provided to clients.
For a particular year, Acme has budgeted the following amounts:
| Office rent and utilities | $100,000 |
| Support staff | $70,000 |
| Advertising | $25,000 |
| Supplies | $5,000 |
| Direct labor (based on 2.000 hours) | $120,000 |
The firm has completed job 101 for a client. Job 101 involved 25 hours of direct labor. Acme assigns indirect costs based on direct labor hours. What is the
ANSWER
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$2,500
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$4,000
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$1,500
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$5,000
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