=+(continuation of 5-38) OBJECTIVE 4 Rudd & Associates has just completed a review of its job-costing system.

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=+(continuation of 5-38) OBJECTIVE 4 Rudd & Associates 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 labour and professional associate labour) and two indirect cost categories (general support and secretarial support) would yield more accurate job costs. Budgeted information for 2015 related to the two direct cost categories is as follows:

Professional partner labour Professional associate labour Number of professionals 5 20 Hours of billable time per professional 1650 per year 1650 per year Total compensation (average per professional) $345 000 $127 000 Budgeted information for 2015 relating to the two indirect cost categories is:

General support Secretarial support Total costs $1 900 000 $600 000 Cost-allocation base Total professional labour-hours Partner labour-hours Required 1 Calculate the 2015 budgeted direct cost rates for:

(a) professional partners and

(b) professional associates.

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Cost Accounting A Managerial Emphasis

ISBN: 9781442563377

2nd Edition

Authors: Monte Wynder, Madhav V. Rajan, Srikant M. Datar, Charles T. Horngren, William Maguire, Rebecca Tan

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