Cheney & Partners, a Quebecbased public accounting partnership, specializes in audit services. Its job-costing system has a single direct-cost category (professional labor) and a single indirect-cost pool (audit support, which contains all costs of the Audit Support Department). Audit support costs are allocated to individual jobs using actual professional labor-hours. Cheney & Partners employs 10 professionals to perform audit services.

Budgeted and actual amounts for 2017 are as follows:

Required
1. Compute the direct-cost rate and the indirect-cost rate per professional labor-hour for 2017 under
(a) Actual costing,
(b) Normal costing, and
(c) The variation from normal costing that uses budgeted rates for direct costs.
2. Which job-costing system would you recommend Cheney & Partners use? Explain.
3. Cheney's 2017 audit of Pierre & Co. was budgeted to take 170 hours of professional labor time. The actual professional labor time spent on the audit was 185 hours. Compute the cost of the Pierre & Co. audit using
(a) Actual costing,
(b) Normal costing, and
(c) The variation from normal costing that uses budgeted rates for direct costs. Explain any differences in the job cost.

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HomcInsert Page Layout Formulas Data Cheney & Partners 2 Budget for 2017 3 Professional labor compensation 4Audit support department costs 5 Professional labor-hours billed to clients16,000 l hours 720,000 7 Actual results for 2017 8 Audit support department costs 9 Professional labor-hours billed to clients15,500 hours $744,000 10 Actual professional labor cost rate53 per hour