Professional Partner Labor Professional Associate Labor Number of professionals Hours of billable time per professional Total compensation (average per professional) 5 25 1,500 per year $210,000 1,500 per year S75,000 Budgeted information for 2017 relating to the two indirect-cost categories is as follows: General Support Secretarial Support Total costs $2,025,000 $450,000 Cost-allocation base Professional labor-hours Partner labor-hours 1. Compute the 2017 budgeted direct-cost rates for (a) professional partners and (b) professional associates. 2. Compute the 2017 budgeted indirect-cost rates for (a) general support and (b) secretarial support. 3. Compute the budgeted costs for the Richardson and Punch jobs, given the following information: Required Richardson, Inc. Punch, Inc. Professional partners 48 hours 32 hours Professional associates 72 hours 128 hours 4. Comment on the results in requirement 3. Why are the job costs different from those computed in Problem 4-37? 5. Would you recommend Kidman & Associates use the job-costing system in Problem 4-37 or the job- costing system in this problem? Explain.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Service industry, job costing, two direct- and two indirect-cost categories, law rm (continuation of 4-37). Kidman has just completed a review of its job-costing system. This review included a detailed analysis of how past jobs used the rm’s resources and interviews with personnel about what factors drive the level of indirect costs. Management concluded that
a system with two direct-cost categories (professional partner labor and professional associate labor) and two indirectcost categories (general support and secretarial support) would yield more accurate
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