Exercise 5-33 (Algo) Methods of Estimating Costs: Account Analysis (LO 5-1, 2) Hughes Payroll and Clerical Services (HPCS) provides payroll, bookkeeping, and other services to small businesses. HPCS financial records show the following costs for last quarter (QTR 1): Supplies Employee costs $ 14,000 1,015,000 455,000 Total administration HPCS recorded 4,375 billable hours in QTR 1 and fixed administrative cost was $245,000. Assuming no change in billable hours in the next quarter (QTR 2). supplies costs are expected to increase by 19 percent. Direct labor costs are expected to increase by 40 percent. Variable administration per billable hour is expected to remain the same, but fixed administration cost is expected to decrease by 16 percent. Required: a. HPCS expects to bill 5,250 hours next quarter. What are the estimated direct materials, direct labor, variable overhead, and fixed overhead costs for next quarter (QTR 2)? b. Determine the total costs per billable hour for QTR 1 and QTR 2.
Exercise 5-33 (Algo) Methods of Estimating Costs: Account Analysis (LO 5-1, 2) Hughes Payroll and Clerical Services (HPCS) provides payroll, bookkeeping, and other services to small businesses. HPCS financial records show the following costs for last quarter (QTR 1): Supplies Employee costs $ 14,000 1,015,000 455,000 Total administration HPCS recorded 4,375 billable hours in QTR 1 and fixed administrative cost was $245,000. Assuming no change in billable hours in the next quarter (QTR 2). supplies costs are expected to increase by 19 percent. Direct labor costs are expected to increase by 40 percent. Variable administration per billable hour is expected to remain the same, but fixed administration cost is expected to decrease by 16 percent. Required: a. HPCS expects to bill 5,250 hours next quarter. What are the estimated direct materials, direct labor, variable overhead, and fixed overhead costs for next quarter (QTR 2)? b. Determine the total costs per billable hour for QTR 1 and QTR 2.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:Exercise 5-33 (Algo) Methods of Estimating Costs: Account Analysis (LO 5-1, 2)
Hughes Payroll and Clerical Services (HPCS) provides payroll, bookkeeping, and other services to small businesses. HPCS financial
records show the following costs for last quarter (QTR 1):
$ 14,000
1,015,000
455,000
HPCS recorded 4,375 billable hours in QTR 1 and fixed administrative cost was $245,000.
Assuming no change in billable hours in the next quarter (QTR 2), supplies costs are expected to increase by 19 percent. Direct labor
costs are expected to increase by 40 percent. Variable administration per billable hour is expected to remain the same, but fixed
administration cost is expected to decrease by 16 percent.
Supplies
Employee costs
Total administration
Required:
a. HPCS expects to bill 5,250 hours next quarter. What are the estimated direct materials, direct labor, variable overhead, and fixed
overhead costs for next quarter (QTR 2)?
b. Determine the total costs per billable hour for QTR 1 and QTR 2.
Complete this question by entering your answers in the tabs below.
Required A
Required B
HPCS expects to bill 5,250 hours next quarter. What are the estimated direct materials, direct labor, variable overhead, and
fixed overhead costs for next quarter (QTR 2)?
Note: Do not round intermediate calculations. Round your final answers to whole dollar.
Cost Item
Direct materials
Direct labor
Variable overhead
Fixed overhead
Total costs
Next Quarter
Cost
$
Required A
Required B >
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