Concept explainers
Revenues | $50,000,000 | |
Total costs: | ||
Direct costs | ||
Professional Labor | $ 20,000,000 | |
Indirect costs | ||
Client support | 25,000,000 | 45,000,000 |
Operating income | $ 5,000,000 |
Frontier has a single direct-cost category (professional labor) and a single indirect-cost pool (client support). Indirect costs are allocated to jobs on the basis of professional labor costs.
- 1. Prepare an overview diagram of the job-costing system. Calculate the 2017 budgeted indirect-cost rate for Frontier Partners.
Required
- 2. The markup rate for pricing jobs is intended to produce operating income equal to 10% of revenues. Calculate the markup rate as a percentage of professional labor costs.
- 3. Frontier is bidding on a consulting job for Sentinel Communications, a wireless communications company. The budgeted breakdown of professional labor on the job is as follows:
Professional Labor Category | Budgeted Rate per Hour | Budgeted Hours |
Director | $200 | 9 |
Partner | 100 | 24 |
Associate | 50 | 100 |
Assistant | 30 | 220 |
Calculate the budgeted cost of the Sentinel Communications job. How much will Frontier bid for the job if it is to earn its target operating income of 10% of revenues?
Trending nowThis is a popular solution!
Learn your wayIncludes step-by-step video
Chapter 4 Solutions
REVEL for Horngren's Cost Accounting: A Managerial Emphasis -- Access Card (16th Edition) (What's New in Accounting)
Additional Business Textbook Solutions
MARKETING:REAL PEOPLE,REAL CHOICES
Financial Accounting, Student Value Edition (5th Edition)
Principles of Economics (MindTap Course List)
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Business Essentials (12th Edition) (What's New in Intro to Business)
- Y Company purchased an asset for $73,000 on January 1, Year 1. The asset was expected to have a four-year life and an $8,000 salvage value. What would be the amount of depreciation expense for Year 1 using double-declining balance? Answerarrow_forwardAnsarrow_forwardPlease give me true answer this financial accounting questionarrow_forward
- Can you please answer this financial accounting question?arrow_forwardY Company purchased an asset for $73,000 on January 1, Year 1. The asset was expected to have a four-year life and an $8,000 salvage value. What would be the amount of depreciation expense for Year 1 using double-declining balance? Ansarrow_forwardFinancial Accountingarrow_forward
- Snowbird Company is constructing a building that qualifies for interest capitalization. It is built between January 1 and December 31, Year 1. Snowbird made the following expenditures related to this building: April 1 $396,000July 1 400,000September 1 510,000December 1 120,000The company borrowed $500,000 at 12% to help finance the project. In addition, Snowbird had outstanding borrowings of $2 million at 8% and $1 million at 9%. Required: Compute the amount of interest capitalized related to the construction of the building. Next Level What effect does the interest capitalization have on the company’s financial statements after it completes the building?arrow_forwardFGH Floral Company has a delivery truck that is being sold after 5 years of use. The current book value of the delivery truck is $6,000. If FGH Floral Company sells the delivery truck for $9,000, what is the impact of this transaction? Provide Answerarrow_forwardOn August 1, 20Y7, Rafael Masey established Planet Realty, which completed the following transactions during the month: Rafael Masey transferred cash from a personal bank account to an account to be used for the business in exchange for Common Stock, $22,000. Purchased supplies on account, $1,190. Earned sales commissions, receiving cash, $18,260. Paid rent on office and equipment for the month, $4,020. Paid creditor on account, $440. Paid dividends, $1,080. Paid automobile expenses (including rental charge) for month, $1,110, and miscellaneous expenses, $750. Paid office salaries, $2,340. Determined that the cost of supplies used was $660.arrow_forward
- What is the corporation's tax liability on these financial accounting question?arrow_forwardEvergreen Logistics incurred the following costs for a new delivery truck: please answer the financial accounting questionarrow_forwardPlease give me true answer this financial accounting questionarrow_forward
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningPrinciples of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,