=+6-42 KK Job costing with multiple direct cost categories, multiple indirect cost pools, law firm

(continuation of 6-40 and 6-41) OBJECTIVES 2, 5 Boyce & Strong has two classifications of professional staff: partners and associates. James Fox asks his assistant to examine the relative use of partners and associates on the recent Jade Publishing and Optical Solutions jobs. The Jade Publishing job used 24 partner-hours and 80 associate-hours. The Optical Solutions job used 56 partner-hours and 40 associate-hours. Therefore, totals of the two jobs together were 80 partner-hours and 120 associate-hours. James decides to examine how using separate direct cost rates for partners and associates and using separate indirect cost pools for partners and associates would have affected the costs of the Jade Publishing and Optical Solutions jobs. Indirect costs in each indirect cost pool would be allocated on the basis of total hours of that category of professional labour. From the total indirect cost pool of $7000, $4600 is attributable to the activities of partners and $2400 is attributable to the activities of associates.

The rates per category of professional labour are as follows:

Category of professional labour Direct cost per hour Indirect cost per hour Partner $100.00 $4600 ÷ 80 hours = $57.50 Associate 50.00 $2400 ÷ 120 hours = $20.00 Required 1 Calculate the costs of the Jade Publishing and Optical Solutions cases using Boyce & Strong’s further refined system, with multiple direct cost categories and multiple indirect cost pools.