REVEL for Horngren's Cost Accounting: A Managerial Emphasis -- Access Card (16th Edition) (What's New in Accounting)
16th Edition
ISBN: 9780134789705
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 4, Problem 4.37P
Service industry,
- 1. Prepare an overview diagram of Kidman’s job-costing system.
Required
- 2. Compute the 2017 budgeted direct-cost rate per hour of professional labor.
- 3. Compute the 2017 budgeted indirect-cost rate per hour of professional labor.
- 4. Kidman & Associates is considering bidding on two jobs:
- a. Litigation work for Richardson. Inc., which requires 120 budgeted hours of professional labor
- b. Labor contract work for Punch, Inc., which requires 160 budgeted hours of professional labor. Prepare a cost estimate for each job.
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Service industry, job costing, law rm. Kidman & Associates is a law rm specializing in labor relations and employeerelated work. It employs 30 professionals (5 partners and 25 associates) who work directly with its clients. The average budgeted total compensation per professional for 2017 is $97,500. Each professional is budgeted to have 1,500 billablehours to clients in 2017. All professionals work for clients to their maximum 1,500 billable hours available. All professional labor costs are included in a single direct-cost category and are traced to jobs on a per-hour basis. All costs of Kidman & Associates other than professional labor costs are included in a single indirect-cost pool (legal support) and are allocated to jobs using professional labor-hours as the allocation base. The budgeted level of indirect costs in 2017 is $2,475,000.
Keaton & Associates is a law firm specializing in labor relations and employee-related work. It employs 20 professionals (2 partners and 18
associates) who work directly with its clients. The average budgeted total compensation per professional for 2017 is $115,000. Each professional is budgeted to have 1,250 billable hours to clients in 2017. All professionals work for clients to their maximum 1,250 billable hours available. All
professional labor costs are included in a single direct-cost category and are traced to jobs on a per-hour basis. All costs of Keaton & Associates other than professional labor costs are included in a single indirect-cost pool (legal support) and are allocated to jobs using professional labor-hours as the allocation base. The budgeted level of indirect costs in
2017 is $2,000,000.
Read the requirements1.
Requirement 1. Identify the components of the overview diagram of
Keaton's
job-costing system.
A
}
B
↓…
Crow Design is an interior design firm. The firm uses a job cost system in which each client is a different "job."Crow Design traces direct labor, licensing costs, and travel costs directly to each job (client). It allocates indirect costs to jobs based on a predetermined indirect cost allocation rate computed as a percentage of direct labor costs.
At the beginning of the current year, managing partner
Brenna Gladstone prepared the following budget:
Direct labor hours (professional). . . . .
8,000 hours
Direct labor costs (professional). . . . .
$1,600,000
Support staff salaries. . . . . . . . . . . . . . .
$190,000
Computer lease payments. . . . . . . . . . .
$41,000
Office supplies. . . . . . . . . . . . . . . . . . . . .
$23,000
Office rent. . . . . . . . . . . . . . . . . . . . . . . . .
$66,000
Later that same year in November,
Crow Design served several clients. Records for two clients appear here:
Fancy Food
AllFood.com
Direct labor hours. . . . .
680…
Chapter 4 Solutions
REVEL for Horngren's Cost Accounting: A Managerial Emphasis -- Access Card (16th Edition) (What's New in 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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