Concept explainers
1.
Prepare
1.

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 Products | R 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.
Working Note (2):
Computed the cost of professional support per hour.
2.
Prepare job cost sheets for the two clients.
2.

Explanation of Solution
Prepare job cost sheets for the two clients.
M Products | R 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.
Working Note (4):
Computed the cost of associate labor per hour.
Working Note (5):
Computed the cost of design support per partner and associate.
Working Note (6):
Computed the cost of staff support per partner and associate.
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Chapter 9 Solutions
Principles of Cost Accounting
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