& Partners, a Quebec-based public accounting partnership, specializes in audit services. Its job-costing system has a single direct-cost category (professional labor) and a single indirect-cost pool (audit support, which contains all costs of the Audit Support Department). Audit support costs are allocated to individual jobs using actual professional labor-hours. Chirko & Partners employs 10 professionals to perform audit services. Budgeted and actual amounts for 2017 are as follows: Chirko & Partners Budget for 2017 Professional labor compensation $975,000 Audit support department costs $675,000 Professional labor-hours billed to clients 15,000 hours Actual results for 2017 Audit support department costs $775,000 Professional labor-hours billed to clients 15,500 hours Actual professional labor cost rate $54 per hour Compute the direct-cost rate and the indirect-cost rate per professional labor-hour for 2017 under each method. (a) Actual Costing Direct-cost rate $54 Indirect-cost rate $50 (b) Normal Costing $54 $45 (c) Variation of Normal Costing $65 $45 Compute the cost of the Pierre & Co. audit under each of the three methods. (a) Actual Costing (b) Normal Costing (c) Variation of Normal Costing Direct-Costs Indirect-Costs Total Job Costs
& Partners, a Quebec-based public accounting partnership, specializes in audit services. Its job-costing system has a single direct-cost category (professional labor) and a single indirect-cost pool (audit support, which contains all costs of the Audit Support Department). Audit support costs are allocated to individual jobs using actual professional labor-hours. Chirko & Partners employs 10 professionals to perform audit services. Budgeted and actual amounts for 2017 are as follows: Chirko & Partners Budget for 2017 Professional labor compensation $975,000 Audit support department costs $675,000 Professional labor-hours billed to clients 15,000 hours Actual results for 2017 Audit support department costs $775,000 Professional labor-hours billed to clients 15,500 hours Actual professional labor cost rate $54 per hour Compute the direct-cost rate and the indirect-cost rate per professional labor-hour for 2017 under each method. (a) Actual Costing Direct-cost rate $54 Indirect-cost rate $50 (b) Normal Costing $54 $45 (c) Variation of Normal Costing $65 $45 Compute the cost of the Pierre & Co. audit under each of the three methods. (a) Actual Costing (b) Normal Costing (c) Variation of Normal Costing Direct-Costs Indirect-Costs Total Job Costs
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Chirko
& Partners employs 10 professionals to perform audit services. Budgeted and actual amounts for
2017
are as follows:Chirko & Partners
Budget for 2017
Professional labor compensation
$975,000
Audit support department costs
$675,000
Professional labor-hours billed to clients
15,000
hours
Actual results for 2017
Audit support department costs
$775,000
Professional labor-hours billed to clients
15,500
hours
Actual professional labor cost rate
$54
per hour
Compute the direct-cost rate and the indirect-cost rate per professional labor-hour for
2017
under each method.|
|
(a)
|
|
|
Actual
|
|
|
Costing
|
|
Direct-cost rate
|
$54
|
|
Indirect-cost rate
|
$50
|
|
(b)
|
|
Normal
|
|
Costing
|
|
$54
|
|
$45
|
|
(c)
|
|
Variation of
|
|
Normal Costing
|
|
$65
|
|
$45
|
Compute the cost of the Pierre & Co. audit under each of the three methods.
| (a) Actual Costing | (b) Normal Costing | (c) Variation of Normal Costing | ||||
| Direct-Costs | ||||||
| Indirect-Costs | ||||||
| Total Job Costs |
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