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 $ 14,000 Employee costs 1,015, 000 Total administration 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 17 percent. Direct labor costs are expected to increase by 36 percent. Variable administration per billable hour is expected to remain the same, but fixed administration cost is expected to decrease by 14 percent.
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 $ 14,000 Employee costs 1,015, 000 Total administration 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 17 percent. Direct labor costs are expected to increase by 36 percent. Variable administration per billable hour is expected to remain the same, but fixed administration cost is expected to decrease by 14 percent.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...
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![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 $ 14,000 Employee costs 1,015, 000 Total administration
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 17 percent. Direct labor costs are expected
to increase by 36 percent. Variable administration per billable hour is expected to
remain the same, but fixed administration cost is expected to decrease by 14 percent.
Required: HPCS expects to bill 5, 425 hours next quarter. What are the estimated
direct materials, direct labor, variable overhead, and fixed overhead costs for next
quarter (QTR 2)? Determine the total costs per billable hour for QTR 1 and QTR 2.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcaeffa16-4fee-437b-9c33-f3eba03d78b5%2Fff5ff00e-6b2c-4023-8705-ef721275abda%2Fweoxo9i_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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 $ 14,000 Employee costs 1,015, 000 Total administration
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 17 percent. Direct labor costs are expected
to increase by 36 percent. Variable administration per billable hour is expected to
remain the same, but fixed administration cost is expected to decrease by 14 percent.
Required: HPCS expects to bill 5, 425 hours next quarter. What are the estimated
direct materials, direct labor, variable overhead, and fixed overhead costs for next
quarter (QTR 2)? Determine the total costs per billable hour for QTR 1 and QTR 2.
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VIEWStep 2: Calculation of total cost and variable cost per hour in Q1:
VIEWStep 3: Calculation of revised variable cost in Q2:
VIEWStep 4: Calculation of Total Cost in Q2:
VIEWStep 5: Calculation of Total cost per billable hour in Q1 and Q2:
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