EBK HORNGREN'S COST ACCOUNTING
16th Edition
ISBN: 9780134475998
Author: Rajan
Publisher: YUZU
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Textbook Question
Chapter 4, Problem 4.33E
Budgeted and actual amounts for 2017 are as follows:
- 1. Compute the direct-cost rate and the indirect-cost rate per professional labor-hour for 2017 under (a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs.
Required
- 2. Which job-costing system would you recommend Cheney & Partners use? Explain.
- 3. Cheney’s 2017 audit of Pierre & Co. was budgeted to take 170 hours of professional labor time. The actual professional labor time spent on the audit was 185 hours. Compute the cost of the Pierre & Co. audit using (a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs. Explain any differences in the job cost.
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JLR Enterprises provides consulting services throughout California and uses a job-order costing systemto accumulate the cost of client projects. Traceable costs are charged directly to individual clients; incontrast, other costs incurred by JLR, but not identifiable with specific clients, are charged to jobs byusing a predetermined overhead application rate. Clients are billed for directly chargeable costs, overhead,and a markup.JLR’s director of cost management, Brent Dean, anticipates the following costs for the upcomingyear:■ Problem 3–47Job-Order Costing in a ConsultingFirm(LO 3-1, 3-2, 3-4, 3-8)1. Traceable costs:$2,500,000CostPercentage of Cost DirectlyTraceable to ClientsProfessional staff salaries ................................ $2,500,000 ..................................... 80%Administrative support staff ............................. 300,000 ..................................... 60%Travel ................................................................ 250,000…
Required information
[The following information applies to the questions displayed below.]
JLR Enterprises provides consulting services throughout California and uses a job-order costing system to accumulate the
cost of client projects. Traceable costs are charged directly to individual clients; in contrast, other costs incurred by JLR,
but not identifiable with specific clients, are charged to jobs by using a predetermined overhead application rate. Clients
are billed for directly chargeable costs, overhead, and a markup.
JLR's director of cost management, Victor Anthony, anticipates the following costs for the upcoming year:
Percentage of Cost
Directly Traceable to
Clients
80%
60%
90%
90%
50%
Type
Professional staff salaries
Administrative support staff
Travel
Photocopying
Other operating costs
Total
The firm's partners desire to make a $640,000 profit for the firm and plan to add a percentage markup on total cost to
achieve that figure.
Cost
$ 2,500,000
300,000
250,000
50,000…
Kumar, Inc., evaluates managers of producing departments on their ability to control costs.
In addition to the costs directly traceable to their departments, each production manager is held responsible for a share of the costs of a support center, the human resources (HR) department. The total costs of HR are allocated on the basis of actual direct labor hours used. The total costs of HR and the actual direct labor hours worked by each producing department are as follows:
Year 1 Year 2
Direct labor hours worked:
Department A 24,000 25,000
Department B 36,000 25,000
Total hours 60,000…
Chapter 4 Solutions
EBK HORNGREN'S COST ACCOUNTING
Ch. 4 - Define cost pool, cost tracing, cost allocation,...Ch. 4 - How does a job-costing system differ from a...Ch. 4 - Why might an advertising agency use job costing...Ch. 4 - Describe the seven steps in job costing.Ch. 4 - Give examples of two cost objects in companies...Ch. 4 - Describe three major source documents used in...Ch. 4 - What is the advantage of using computerized source...Ch. 4 - Give two reasons why most organizations use an...Ch. 4 - Distinguish between actual costing and normal...Ch. 4 - Describe two ways in which a house-construction...
Ch. 4 - Comment on the following statement: In a...Ch. 4 - Describe three different debit entries to the...Ch. 4 - Describe three alternative ways to dispose of...Ch. 4 - When might a company use budgeted costs rather...Ch. 4 - Prob. 4.15QCh. 4 - Which of the following does not accurately...Ch. 4 - Sturdy Manufacturing Co. assembled the following...Ch. 4 - For which of the following industries would...Ch. 4 - ABC Company uses job-order costing and has...Ch. 4 - Under Stanford Corporations job costing system,...Ch. 4 - (10 min) Job costing, process costing. In each of...Ch. 4 - Actual costing, normal costing, accounting for...Ch. 4 - Job costing, normal and actual costing. Atkinson...Ch. 4 - Budgeted manufacturing overhead rate, allocated...Ch. 4 - Job costing, accounting for manufacturing...Ch. 4 - Job costing, consulting firm. Frontier Partners, a...Ch. 4 - Time period used to compute indirect cost rates....Ch. 4 - Accounting for manufacturing overhead. Creative...Ch. 4 - Job costing, journal entries. The University of...Ch. 4 - Journal entries, T-accounts, and source documents....Ch. 4 - Job costing, journal entries. Donald Transport...Ch. 4 - Job costing, unit cost, ending work in process....Ch. 4 - Job costing; actual, normal, and variation from...Ch. 4 - Job costing; variation on actual, normal, and...Ch. 4 - Proration of overhead. The Ride-On-Wave Company...Ch. 4 - Job costing, accounting for manufacturing...Ch. 4 - Service industry, job costing, law firm. Kidman ...Ch. 4 - Service industry, job costing, two direct- and two...Ch. 4 - Proration of overhead. (Z. Iqbal, adapted) The Zaf...Ch. 4 - Normal costing, overhead allocation, working...Ch. 4 - Proration of overhead with two indirect cost...Ch. 4 - General ledger relationships, under- and...Ch. 4 - Overview of general ledger relationships. Estevez...Ch. 4 - Allocation and proration of overhead. Resource...Ch. 4 - (2530 min.) Job costing, ethics. Joseph Underwood...Ch. 4 - Job costingservice industry. Market Pulse performs...
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