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(continuation of 5-31 and 5-32). Timlin has two classifications of professional staff: partners and associates. Hamilton asks her assistant to examine the relative use of partners and associates on the recent Lopez Enterprises and Clinical Inc. jobs. The Lopez Enterprises job used 1,400 partner-hours and 1,100 associate-hours. The Clinical Inc. job used 1,100 partner-hours and 1,400 associate-hours. Therefore, totals of the two jobs together were 2,500 partner-hours and 2,500 associate-hours. Hamilton decides to examine how using separate direct-cost rates for partners and associates and using separate indirect-cost pools for partners and associates would have affected the costs of the Lopez Enterprises and Clinical Inc. jobs. Indirect costs in each indirect-cost pool would be allocated on the basis of total hours of that category of professional labor. From the total indirect-cost pool of $175,000, $100,000 is attributable to the activities of partners and $75,000 is attributable to the activities of associates. The rates per category of professional labor are as follows: Category of Professional Labor Direct Cost per Hour $200 $150 Partner Associate Indirect Cost $100,000 2,500 hours $40 $75,000 2,500 hours = $30 per Hour = 1. Compute the costs of the Lopez Enterprises and Clinical Inc. jobs using Timlin's further refined system, with multiple direct-cost categories and multiple indirect-cost pools. 2. For what decisions might Timlin Associates find it more useful to use this job-costing approach rather than the approaches of a simple costing system or a refined costing system with multiple direct-cost

(continuation of 5-31 and 5-32). Timlin has two classifications of professional staff: partners and associates. Hamilton asks her assistant to examine the relative use of partners and associates on the recent Lopez Enterprises and Clinical Inc. jobs. The Lopez Enterprises job used 1,400 partner-hours and 1,100 associate-hours. The Clinical Inc. job used 1,100 partner-hours and 1,400 associate-hours. Therefore, totals of the two jobs together were 2,500 partner-hours and 2,500 associate-hours. Hamilton decides to examine how using separate direct-cost rates for partners and associates and using separate indirect-cost pools for partners and associates would have affected the costs of the Lopez Enterprises and Clinical Inc. jobs. Indirect costs in each indirect-cost pool would be allocated on the basis of total hours of that category of professional labor. From the total indirect-cost pool of $175,000, $100,000 is attributable to the activities of partners and $75,000 is attributable to the activities of associates. The rates per category of professional labor are as follows: Category of Professional Labor Direct Cost per Hour $200 $150 Partner Associate Indirect Cost $100,000 2,500 hours $40 $75,000 2,500 hours = $30 per Hour = 1. Compute the costs of the Lopez Enterprises and Clinical Inc. jobs using Timlin's further refined system, with multiple direct-cost categories and multiple indirect-cost pools. 2. For what decisions might Timlin Associates find it more useful to use this job-costing approach rather than the approaches of a simple costing system or a refined costing system with multiple direct-cost

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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(continuation of 5-31 and 5-32). Timlin has two classifications of professional staff: partners and associates. Hamilton asks her assistant to examine the relative use of partners and associates on the recent Lopez Enterprises and Clinical Inc. jobs. The Lopez Enterprises job used 1,400 partner-hours and 1,100 associate-hours. The Clinical Inc. job used 1,100 partner-hours and 1,400 associate-hours. Therefore, totals of the two jobs together were 2,500 partner-hours and 2,500 associate-hours. Hamilton decides to examine how using separate direct-cost rates for partners and associates and using separate indirect-cost pools for partners and associates would have affected the costs of the Lopez Enterprises and Clinical Inc. jobs. Indirect costs in each indirect-cost pool would be allocated on the basis of total hours of that category of professional labor. From the total indirect-cost pool of $175,000, $100,000 is attributable to the activities of partners and $75,000 is attributable to the activities of associates. The rates per category of professional labor are as follows: Category of Professional Labor Direct Cost per Hour $200 $150 Partner Associate Indirect Cost $100,000 2,500 hours $40 $75,000 2,500 hours = $30 per Hour = 1. Compute the costs of the Lopez Enterprises and Clinical Inc. jobs using Timlin's further refined system, with multiple direct-cost categories and multiple indirect-cost pools. 2. For what decisions might Timlin Associates find it more useful to use this job-costing approach rather than the approaches of a simple costing system or a refined costing system with multiple direct-cost
Transcribed Image Text:(continuation of 5-31 and 5-32). Timlin has two classifications of professional staff: partners and associates. Hamilton asks her assistant to examine the relative use of partners and associates on the recent Lopez Enterprises and Clinical Inc. jobs. The Lopez Enterprises job used 1,400 partner-hours and 1,100 associate-hours. The Clinical Inc. job used 1,100 partner-hours and 1,400 associate-hours. Therefore, totals of the two jobs together were 2,500 partner-hours and 2,500 associate-hours. Hamilton decides to examine how using separate direct-cost rates for partners and associates and using separate indirect-cost pools for partners and associates would have affected the costs of the Lopez Enterprises and Clinical Inc. jobs. Indirect costs in each indirect-cost pool would be allocated on the basis of total hours of that category of professional labor. From the total indirect-cost pool of $175,000, $100,000 is attributable to the activities of partners and $75,000 is attributable to the activities of associates. The rates per category of professional labor are as follows: Category of Professional Labor Direct Cost per Hour $200 $150 Partner Associate Indirect Cost $100,000 2,500 hours $40 $75,000 2,500 hours = $30 per Hour = 1. Compute the costs of the Lopez Enterprises and Clinical Inc. jobs using Timlin's further refined system, with multiple direct-cost categories and multiple indirect-cost pools. 2. For what decisions might Timlin Associates find it more useful to use this job-costing approach rather than the approaches of a simple costing system or a refined costing system with multiple direct-cost
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