Koffler Legal & Consulting Services PLLC., provides legal consulting services tobusinesses in NYc. They follow a job-costing system with a single direct-cost category(professional labor costs) and a single indirect-cost pool (legal administration costs).Actual professional hours are used as allocation base in order to allocate legaladministration costs. Koffler Legal & Consulting Services PLLC., currently has 10lawyers to perform consulting services. Budgeted and actual amounts for 2019 are asfollows:Koffler Legal & Consulting Services PLLC.Budget for 2019$990,000$774,000Professional labor costsLegal administration costsProfessional labor-hours billed to customers18,000 hoursActual Results for 2019Legal administration costsProfessional labor-hours billed to customers$735,00017,500$59 per hourActual professional labor cost rate1. Consider (a) actual costing, (b) normal costing, and (c) a mixed costing approach,which is a variation from normal costing where budgeted rates for direct costs areused. For each of the costing approaches mentioned, calculate the direct-cost rateand the indirect-cost rate per professional labor-hour for 2019.2. Koffler Legal & Consulting Services PLLC.'s provided a legal consulting service toMagnolia Cosmetics at 2019. This job was budgeted to take 150 hours ofprofessional labor time to complete. However, the actual professional labor timespent on the job was found to be 160 hours. Considering this information, computethe cost of the consulting service provided to Magnolia Cosmetics using (a) actualcosting, (b) normal costing, and (c) the mixed costing approach, which is a variationfrom normal costing where budgeted rates for direct costs are used. Explain anydifferences in the job cost.

Name: Koffler Legal & Consulting Services PLLC., provides legal consulting
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Description: Koffler Legal & Consulting Services PLLC., provides legal consulting services tobusinesses in NYc. They follow a job-costing system with a single direct-cost category(professional labor costs) and a single indirect-cost pool (legal administration co

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Koffler Legal & Consulting Services PLLC., provides legal consulting services to businesses in NYC. They follow a job-costing system with a single direct-cost category (professional labor costs) and a single indirect-cost pool (legal administration costs). Actual professional hours are used as allocation base in order to allocate legal administration costs. Koffler Legal & Consulting Services PLLC., currently has 10 lawyers to perform consulting services. Budgeted and actual amounts for 2019 are as follows: Koffler Legal & Consulting Services PLLC. Budget for 2019 $990,000 $774,000 Professional labor costs Legal administration costs Professional labor-hours billed to customers 18,000 hours Actual Results for 2019 Legal administration costs $735,000 Professional labor-hours billed to customers 17,500 Actual professional labor cost rate $59 per hour 1. Consider (a) actual costing, (b) normal costing, and (c) a mixed costing approach, which is a variation from normal costing where budgeted rates for direct costs are used. For each of the costing approaches mentioned, calculate the direct-cost rate and the indirect-cost rate per professional labor-hour for 2019.

Koffler Legal & Consulting Services PLLC., provides legal consulting services to businesses in NYC. They follow a job-costing system with a single direct-cost category (professional labor costs) and a single indirect-cost pool (legal administration costs). Actual professional hours are used as allocation base in order to allocate legal administration costs. Koffler Legal & Consulting Services PLLC., currently has 10 lawyers to perform consulting services. Budgeted and actual amounts for 2019 are as follows: Koffler Legal & Consulting Services PLLC. Budget for 2019 $990,000 $774,000 Professional labor costs Legal administration costs Professional labor-hours billed to customers 18,000 hours Actual Results for 2019 Legal administration costs $735,000 Professional labor-hours billed to customers 17,500 Actual professional labor cost rate $59 per hour 1. Consider (a) actual costing, (b) normal costing, and (c) a mixed costing approach, which is a variation from normal costing where budgeted rates for direct costs are used. For each of the costing approaches mentioned, calculate the direct-cost rate and the indirect-cost rate per professional labor-hour for 2019.

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter9: Cost Accounting For Service Businesses, The Balanced Scorecard, And Quality Costs

Section: Chapter Questions

Problem 8P

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A manufacturing company has two service and two production departments. Human Resources and Machine Repair are the service departments. The production departments are Grinding and Polishing. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The human resources department services all departments of the company, and its costs are allocated using the numbers of employees within each department, while machine repair costs are allocable to Grinding and Polishing on the basis of machine hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.
A manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the service departments. The production departments are Assembly and Machining. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The building maintenance department services all departments of the company, and its costs are allocated using floor space occupied, while factory office costs are allocable to Assembly and Machining on the basis of direct labor hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.
The following describes the job responsibilities of two employees of Barney Manufacturing. Joan Dennison, Cost Accounting Manager. Joan is responsible for measuring and collecting costs associated with the manufacture of the garden hose product line. She is also responsible for preparing periodic reports that compare the actual costs with planned costs. These reports are provided to the production line managers and the plant manager. Joan helps to explain and interpret the reports. Steven Swasey, Production Manager. Steven is responsible for the manufacture of the high-quality garden hose. He supervises the line workers, helps to develop the production schedule, and is responsible for seeing that production quotas are met. He is also held accountable for controlling manufacturing costs. Required: CONCEPTUAL CONNECTION Identify Joan and Steven as line or staff and explain your reasons.
San Mateo Optics, Inc., specializes in manufacturing lenses for large telescopes and cameras used in space exploration. As the specifications for the lenses are determined by the customer and vary considerably, the company uses a job-order costing system. Manufacturing overhead is applied to jobs on the basis of direct labor hours, utilizing the absorption- or full-costing method. San Mateos predetermined overhead rates for 20x1 and 20x2 were based on the following estimates. Jim Cimino, San Mateos controller, would like to use variable (direct) costing for internal reporting purposes as he believes statements prepared using variable costing are more appropriate for making product decisions. In order to explain the benefits of variable costing to the other members of San Mateos management team, Cimino plans to convert the companys income statement from absorption costing to variable costing. He has gathered the following information for this purpose, along with a copy of San Mateos 20x1 and 20x2 comparative income statement. San Mateo Optics, Inc. Comparative Income Statement For the Years 20x1 and 20x2 San Mateos actual manufacturing data for the two years are as follows: The companys actual inventory balances were as follows: For both years, all administrative expenses were fixed, while a portion of the selling expenses resulting from an 8 percent commission on net sales was variable. San Mateo reports any over-or underapplied overhead as an adjustment to the cost of goods sold. Required: 1. For the year ended December 31, 20x2, prepare the revised income statement for San Mateo Optics, Inc., utilizing the variable-costing method. Be sure to include the contribution margin on the revised income statement. 2. Describe two advantages of using variable costing rather than absorption costing. (CMA adapted)
Vargas, Inc., produces industrial machinery. Vargas has a machining department and a group of direct laborers called machinists. Each machinist is paid 25,000 and can machine up to 500 units per year. Vargas also hires supervisors to develop machine specification plans and to oversee production within the machining department. Given the planning and supervisory work, a supervisor can oversee three machinists, at most. Vargass accounting and production history reveal the following relationships between units produced and the costs of direct labor and supervision (measured on an annual basis): Required: 1. Prepare two graphs: one that illustrates the relationship between direct labor cost and units produced, and one that illustrates the relationship between the cost of supervision and units produced. Let cost be the vertical axis and units produced the horizontal axis. 2. How would you classify each cost? Why? 3. Suppose that the normal range of activity is between 2,400 and 2,450 units and that the exact number of machinists is currently hired to support this level of activity. Further suppose that production for the next year is expected to increase by an additional 400 units. How much will the cost of direct labor increase (and how will this increase be realized)? Cost of supervision?
Geneva, Inc., makes two products, X and Y, that require allocation of indirect manufacturing costs. The following data were compiled by the accountants before making any allocations: The total cost of purchasing and receiving parts used in manufacturing is 60,000. The company uses a job-costing system with a single indirect cost rate. Under this system, allocated costs were 48,000 and 12,000 for X and Y, respectively. If an activity-based system is used, what would be the allocated costs for each product?
Minor Co. has a job order cost system and applies overhead based on departmental rates. Service Department 1 has total budgeted costs of 168,000 for next year. Service Department 2 has total budgeted costs of 280,000 for next year. Minor allocates service department costs solely to the producing departments. Service Department 1 cost is allocated to producing departments on the basis of machine hours. Service Department 2 cost is allocated to producing departments on the basis of direct labor hours. Producing Department 1 has budgeted 8,000 machine hours and 12,000 direct labor hours. Producing Department 2 has budgeted 2,000 machine hours and 12,000 direct labor hours. What is the total cost allocation from the two service departments to Producing Department 1? a. 173,600 b. 140,000 c. 134,400 d. 274,400
Cynthia Rogers, the cost accountant for Sanford Manufacturing, is preparing a management report that must include an allocation of overhead. The budgeted overhead for each department and the data for one job are as follows: Using the departmental overhead application rates, and allocating overhead on the basis of direct labor hours, overhead applied to Job 231 in the Tooling Department would be: a. 44.00. b. 197.50. c. 241.50. d. 501.00.
Bounce Back Insurance Company carries three major lines of insurance: auto, workers compensation, and homeowners. The company has prepared the following report: Management is concerned that the administrative expenses may make some of the insurance lines unprofitable. However, the administrative expenses have not been allocated to the insurance lines. The controller has suggested that the administrative expenses could be assigned to the insurance lines using activity-based costing. The administrative expenses are comprised of five activities. The activities and their rates are as follows: Activity-base usage data for each line of insurance were retrieved from the corporate records as follows: a. Complete the product profitability report through the administrative activities. Determine the operating income as a percent of premium revenue, rounded to the nearest whole percent. b. Interpret the report.
The management of Gwinnett County Chrome Company, described in Problem 1A, now plans to use the multiple production department factory overhead rate method. The total factory overhead associated with each department is as follows: Instructions 1. Determine the multiple production department factory overhead rates, using direct labor hours for the Stamping Department and machine hours for the Plating Department. 2. Determine the product factory overhead costs, using the multiple production department rates in (1).
John Sheng, a cost accountant at Starlet Company, is developing departmental factory overhead application rates for the companys Tooling and Fabricating departments. The budgeted overhead for each department and the data for one job are as follows: Using the departmental overhead application rates, total overhead applied to Job 231 in the Tooling and Fabricating departments will be: a. 225. b. 303. c. 537. d. 671.
Nutts management is very concerned about the cost of overhead on its jobs. When jobs are complete, overhead costs should be between 15% and 20% of total costs. For example, the labor cost on Job 8958 is 25% of total costs, higher than the norm. Open Job 8961 and click the Chart sheet tab. A pie chart appears showing the cost components on that job. Record the labor cost percentage in the space provided. Repeat this for each of the jobs worked on in August. Did Nutt maintain good cost control on all its jobs? Explain. Worksheet. During September, Job 8963 required two additional material requisitions to complete the job. Open JOB8963 and modify the job cost sheet to include an area for four direct material requisition entries instead of three. Then enter the following two materials requisitions onto the worksheet: Preview the printout to make sure it will print neatly on one page, and then print the worksheet. Save the completed worksheet as JOBT. Chart. Open JOB8964 and click the Chart sheet tab. Prepare a bar chart for JOB8964 showing the amount of material, labor, and overhead required to complete the job. Use the Chart Data Table found in rows 4246 as a basis for preparing the chart. Enter your name somewhere on the chart. Save the file again as J0B8964. Print the chart.