This problem continues the Draper Consulting, Inc., situation from Problem 17-35 of Chapter 17. Recall that Draper

Question:

This problem continues the Draper Consulting, Inc., situation from Problem 17-35 of Chapter 17. Recall that Draper allocated indirect costs to jobs based on a predetermined indirect cost allocation rate, computed as a percentage of direct labor costs. Because Draper provides a service, there are no direct materials costs. Draper is now considering using an ABC system. Information about ABC costs follows:

Budgeted Cost Cost Allocation Rate Allocation Base Number of designs Direct labor hours Number of tests of Activity 350,

Records for two clients appear here:

This problem continues the Draper Consulting, situation 17-35

Requirements
1. Compute the total cost of each job.
2. Is the job cost greater or less than that computed in Problem 17-35 for each job? Why?
3. If Draper wants to earn gross profit equal to 25% of cost, how much (what fee) should it charge each of these twoclients?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Answer rating: 63% (22 reviews)

Req 1 Draper Consulting Inc ABC Costing System Estimated Cost of Tommys Trains and Marcias Cookies J...View the full answer

Answered By

Asim farooq

I have done MS finance and expertise in the field of Accounting, finance, cost accounting, security analysis and portfolio management and management, MS office is at my fingertips, I want my client to take advantage of my practical knowledge. I have been mentoring my client on a freelancer website from last two years, Currently I am working in Telecom company as a financial analyst and before that working as an accountant with Pepsi for one year. I also join a nonprofit organization as a finance assistant to my job duties are making payment to client after tax calculation, I have started my professional career from teaching I was teaching to a master's level student for two years in the evening. My Expert Service Financial accounting, Financial management, Cost accounting, Human resource management, Business communication and report writing. Financial accounting : • Journal entries • Financial statements including balance sheet, Profit & Loss account, Cash flow statement • Adjustment entries • Ratio analysis • Accounting concepts • Single entry accounting • Double entry accounting • Bills of exchange • Bank reconciliation statements Cost accounting : • Budgeting • Job order costing • Process costing • Cost of goods sold Financial management : • Capital budgeting • Net Present Value (NPV) • Internal Rate of Return (IRR) • Payback period • Discounted cash flows • Financial analysis • Capital assets pricing model • Simple interest, Compound interest & annuities

4.40+ 65+ Reviews 86+ Question Solved

Related Book For book-img-for-question

Financial and Managerial Accounting

ISBN: 978-0132497978

3rd Edition

Authors: Horngren, Harrison, Oliver

See More Books

Question Posted: Dec 15, 2011 10:36 AM

See More Questions

This problem continues the Draper Consulting, Inc., situation from Problem 17-35 of Chapter 17. Recall that Draper

Question:

Budgeted Cost Cost Allocation Rate Allocation Base Number of designs Direct labor hours Number of tests of Activity 350,000 Activity Design 7,000 110 Programming Testing 550,000 288,000 3,500

Step by Step Answer:

Req 1 Draper Consulting Inc ABC Costing System Estimated Cost of Tommys Trains and Marcias Cookies J...View the full answer

Financial and Managerial Accounting

Students also viewed these Managerial Accounting questions