Kahn has just completed a review of its job- costing system. This review included a detailed analysis of how past jobs used the firm's resources and interviews with personnel about what factors drive the level of indirect costs. Management concluded that a system with two direct- cost categories (professional partner labor and professional associate labor) and two indirect- cost categories (general support and secretarial support) would yield more accurate job costs. Budgeted information for 2012 related to the two direct- cost categories is as follows:

Budgeted information for 2012 relating to the two indirect- cost categories is as follows:

Required

1. Compute the 2014 budgeted direct-cost rates for 

(a) Professional partners 

(b) Professional associates. 

2. Compute the 2014 budgeted indirect-cost rates for 

(a) General support 

(b) Secretarial support. 

3. Compute the budgeted costs for the Richardson and Punch jobs, given the following information:

4. Comment on the results in requirement 3. Why are the job costs different from those computed in Problem 4- 26?
5. Would you recommend Kahn & Associates use the job- costing system in Problem 4- 26 or the job- costing system in this problem?Explain.

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Professional Partner Labor Professional Associate Labor Number of professionals Hours of billable time per professional Total compensation (average per professional) 10 20 1,500 per year 1,500 per year $195,000 $60,000 General Support $2,250,000 Professional labor-hours Secretarial Support $585,000 Partner labor-hours Total costs Cost-allocation base Richardson, Inc. 48 hours 72 hours Punch, Inc 29 hours 116 hours Professional parthers Professional associates