Horngren's Cost Accounting, Student Value Edition (16th Edition)
16th Edition
ISBN: 9780134476032
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 5, Problem 5.32P
| Other Direct Costs | Steger Enterprises | Bluestone Inc. |
| Research support labor | $36,000 | $ 77,000 |
| Computer time | 8,000 | 32,000 |
| Travel and allowances | 14,000 | 84,000 |
| Telephones/faxes | 5,000 | 24,000 |
| Photocopying | 6,000 | 14,000 |
| Total | $69,000 | $231,000 |
Peyton decides to calculate the costs of each job as if Wharton had used six direct-cost pools and a single indirect-cost pool. The single indirect-cost pool would have $200,000 of costs and would be allocated to each case using the professional labor-hours base.
- 1. Calculate the revised indirect-cost allocation rate per professional labor-hour for Wharton Associates when total indirect costs are $200,000.
Required
- 2. Compute the costs of the Steger Enterprises and Bluestone Inc. jobs if Wharton Associates had used its refined costing system with multiple direct-cost categories and one indirect-cost pool.
- 3. Compare the costs of Steger Enterprises and Bluestone Inc. jobs in requirement 2 with those in requirement 2 of Problem 5-31. Comment on the results
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Students have asked these similar questions
Acme Consulting uses job order costing to determine the cost of services provided to clients.
For a particular year, Acme has budgeted the following amounts:
Office rent and utilities
$100,000
Support staff
$70,000
Advertising
$25,000
Supplies
$5,000
Direct labor (based on 2.000 hours)
$120,000
The firm has completed job 101 for a client. Job 101 involved 25 hours of direct labor. Acme assigns indirect costs based on direct labor hours. What is the cost of job 101?
ANSWER
$2,500
$4,000
$1,500
$5,000
I DON'T KNOW YET
Direct labor hours (professional). . . . .
10,000 hours
Direct labor costs (professional). . . . .
$1,300,000
Support staff salaries. . . . . . . . . . . . . . .
$160,000
Computer lease payments. . . . . . . . . . .
$48,000
Office supplies. . . . . . . . . . . . . . . . . . . . .
$28,000
Office rent. . . . . . . . . . . . . . . . . . . . . . . . .
$63,000
Dining Coop
SunTime.com
Direct labor hours. . . . .
740 hours
70 hours
Licensing costs. . . . . . .
$2,700
$200
Travel costs. . . . . . . . . .
$5,000
$0
Requirement 2. Compute the total cost of each of the two jobs listed.
First enter in the direct costs for each job, then enter in the indirect costs and total cost for the jobs. (Complete all input fields. For accounts with no balance, make sure to enter "0" in the appropriate cell. Enter percentage amounts as a whole number. Round your answers to the nearest whole dollar.)
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.
Chapter 5 Solutions
Horngren's Cost Accounting, Student Value Edition (16th Edition)
Ch. 5 - What is broad averaging, and what consequences can...Ch. 5 - Why should managers worry about product...Ch. 5 - What is costing system refinement? Describe three...Ch. 5 - What is an activity-based approach to designing a...Ch. 5 - Describe four levels of a cost hierarchy.Ch. 5 - Why is it important to classify costs into a cost...Ch. 5 - What are the key reasons for product cost...Ch. 5 - Prob. 5.8QCh. 5 - Department indirect-cost rates are never...Ch. 5 - Prob. 5.10Q
Ch. 5 - Prob. 5.11QCh. 5 - Prob. 5.12QCh. 5 - Activity-based costing is the wave of the present...Ch. 5 - Increasing the number of indirect-cost pools is...Ch. 5 - The controller of a retail company has just had a...Ch. 5 - Conroe Company is reviewing the data provided by...Ch. 5 - Prob. 5.17MCQCh. 5 - Cost hierarchy. Roberta, Inc., manufactures...Ch. 5 - ABC, cost hierarchy, service. (CMA, adapted)...Ch. 5 - Alternative allocation bases for a professional...Ch. 5 - Plant-wide, department, and ABC Indirect cost...Ch. 5 - Plant-wide, department, and activity-cost rates....Ch. 5 - ABC, process costing. Sander Company produces...Ch. 5 - Department costing, service company. DLN is an...Ch. 5 - Activity-based costing, service company....Ch. 5 - Activity-based costing, manufacturing. Decorative...Ch. 5 - ABC, retail product-line profitability. Fitzgerald...Ch. 5 - Prob. 5.28ECh. 5 - Activity-based costing. The job-costing system at...Ch. 5 - ABC, product costing at banks,...Ch. 5 - Problems 5-31 Job costing with single direct-cost...Ch. 5 - Job costing with multiple direct-cost categories,...Ch. 5 - Job costing with multiple direct-cost categories,...Ch. 5 - First-stage allocation, time-driven activity-based...Ch. 5 - First-stage allocation, time-driven activity-based...Ch. 5 - Department and activity-cost rates, service...Ch. 5 - Activity-based costing, merchandising. Pharmahelp,...Ch. 5 - Choosing cost drivers, activity-based costing,...Ch. 5 - ABC, health care. Crosstown Health Center runs two...Ch. 5 - Unused capacity, activity-based costing,...Ch. 5 - Unused capacity, activity-based costing,...Ch. 5 - ABC, implementation, ethics. (CMA, adapted) Plum...Ch. 5 - Activity-based costing, activity-based management,...
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