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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.

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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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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