Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Chapter 9, Problem 8P

1.

To determine

Prepare job cost sheets for M Products and R Markets.

1.

Expert Solution
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Explanation of Solution

Budgeted overhead allocation rate: The budgeted overhead allocation rate is the rate at which the overhead is allocated. This is calculated by dividing the total fixed and variable overheads cost by the base of the allocation.

Prepare job cost sheets for M Products and R Markets.

 M ProductsR Markets
Professional labor cost:  
50 hours×$60 (1)$3,000 
20 hours×$60 (1) $1,200
Professional support:  
50 hours×$40 (2)2,000 
20 hours×$40 (2) 800
Total$5,000$2,000

Working Note (1):

Compute the cost of professional labor per hour.

Cost per hour=[(Partner salary×Number of partners)+(Associate salary× Number of associates)(Number of hours×Number of partners and associates)]=[($150,000×2)+($60,000×4)(1,500hours×6)]=$60

Working Note (2):

Computed the cost of professional support per hour.

(Cost of professional support per hour)=Cost of professional supportNumber of hours=$360,000{(50 hours×2partners)+(20hours×4 associates)}=$360,0009,000hours=$40

2.

To determine

Prepare job cost sheets for the two clients.

2.

Expert Solution
Check Mark

Explanation of Solution

Prepare job cost sheets for the two clients.

 M ProductsR Markets
Professional labor cost:  
30 hours×$100 (3)$3,000 
5 hours×$100 (3) $500
Associate labor cost:  
20 hours×$40 (4)800 
15 hours×$40 (4) 600
Design support:  
$3,800×.22 (5)836 
$1,100×.22 (5) 242
Staff support:  
50 hours×$26.67 (6)1,334 
20 hours×$26.67 (6) 533
Total$5,970$1,875

Working Note (3):

Compute the cost of partner labor per hour.

Cost per hour=[Partners salaryNumber of hours]=[$150,0001,500hours]=$100

Working Note (4):

Computed the cost of associate labor per hour.

Cost per hour=[Associates salaryNumber of hours]=[$60,0001,500hours]=$40

Working Note (5):

Computed the cost of design support per partner and associate.

Cost per partner associate=[Cost of design support(Partner salary×Number of partners)+(Associate salary× Number of associates)]=[$120,000($150,000×2)+($60,000×4)]=$.22

Working Note (6):

Computed the cost of staff support per partner and associate.

Cost per partner associate=[Cost of staff support(Number of partners and associates×Number of hours)]=[$240,000(6×1,500)]=$26.67

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Chapter 9 Solutions

Principles of Cost Accounting

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