Job costing with single direct-cost category, single indirect-cost pool: Law firm, Bradley Associates, is a recently founded law partnership. Emmit Harrington, the managing partner of Bradley Associates, has just finished a tense phone call with Martin Omar, president of Campa Coal. Omar strongly complained about the price Bradley charged for some legal work done for Campa Coal. Harrington also received a phone call from its only other client ISL Edith's Glass), which was very pleased with both the quality of the work and the price charged on its most recent fob. Bradley Associates operates at capacity and uses a cost-based approach to pricing billing each job. Currently it uses a simple costing system with a single direct-cost category (professional labor-hours) and a single indirect- cost pool (general support). Indirect costs are allocated to cases on the basis of professional labor-hours per case. The job files show the following: Campa Coal St Edith's Glass Professional labor 150 hours 100 hours Professional labor costs at Bradley Associates are SSO an hour. Indirect costs are allocated to cases at SIOO an hour. Total indirect costs in the most recent period were $25,000. 1. Why is it important for Bradley Associates to understand the costs associated with individual jobs? 2. Compute the costs of the Campa Coal and St. Edith's Glass jobs using Bradley's simple costing system.
Job costing with single direct-cost category, single indirect-cost pool: Law firm, Bradley Associates, is a recently founded law partnership. Emmit Harrington, the managing partner of Bradley Associates, has just finished a tense phone call with Martin Omar, president of Campa Coal. Omar strongly complained about the price Bradley charged for some legal work done for Campa Coal. Harrington also received a phone call from its only other client ISL Edith's Glass), which was very pleased with both the quality of the work and the price charged on its most recent fob. Bradley Associates operates at capacity and uses a cost-based approach to pricing billing each job. Currently it uses a simple costing system with a single direct-cost category (professional labor-hours) and a single indirect- cost pool (general support). Indirect costs are allocated to cases on the basis of professional labor-hours per case. The job files show the following: Campa Coal St Edith's Glass Professional labor 150 hours 100 hours Professional labor costs at Bradley Associates are SSO an hour. Indirect costs are allocated to cases at SIOO an hour. Total indirect costs in the most recent period were $25,000. 1. Why is it important for Bradley Associates to understand the costs associated with individual jobs? 2. Compute the costs of the Campa Coal and St. Edith's Glass jobs using Bradley's simple costing system.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Job costing with single direct-cost category, single indirect-cost pool: Law
firm, Bradley Associates, is a recently founded law partnership. Emmit
Harrington, the managing partner of Bradley Associates, has just finished a
tense phone call with Martin Omar, president of Campa Coal. Omar strongly
complained about the price Bradley charged for some legal work done for
Campa Coal. Harrington also received a phone call from its only other client
ISL Edith's Glass), which was very pleased with both the quality of the work
and the price charged on its most recent fob.
Bradley Associates operates at capacity and uses a cost-based approach to
pricing billing each job. Currently it uses a simple costing system with a
single direct-cost category (professional labor-hours) and a single indirect-
cost pool (general support). Indirect costs are allocated to cases on the basis
of professional labor-hours per case. The job files show the following:
Campa Coal St Edith's Glass
Professional labor 150 hours
100 hours
Professional labor costs at Bradley Associates are SSO an hour. Indirect
costs are allocated to cases at SIOO an hour. Total indirect costs in the most
recent period were $25,000.
1. Why is it important for Bradley Associates to understand the costs
associated with individual jobs?
2. Compute the costs of the Campa Coal and St. Edith's Glass jobs using
Bradley's simple costing system.
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