Computing indirect-cost rates, job costing. (20-30 minutes) Michel Scaramouche, the president of Tax-Assistance, SA, is examining alternative ways to calculate indirect-cost rates. He collects the following infor mation from the budget for 2000: lo1

Tax-Assistance’s job-costing system has a single direct-cost category (professional labour at BFr 1,500 per hour) and a single indirect-cost pool (office support that is allocated using professional labour-hours).
Tax-Assistance charges clients BFr 3,350 per professional labour-hour.

REQUIRED 1. Calculate budgeted indirect-cost rates per professional labour-hour using:

a. Quarterly budgeted billable hours as the denominator

b. Annual budgeted billable hours as the denominator 2. Calculate the operating profit for the following four customers using:

a. Quarterly-based indirect-cost rates

b. An annual indirect-cost rate Jean-Baptiste Roquelin: 10 hours in February Violette Leduc: 6 hours in March and 4 hours in April Alphonse Dudet: 4 hours in June and 6 hours in August Francine Leclerc: 5 hours in January, 2 hours in September and 3 hours in November 3. Comment on your results in requirement 2.

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Budgeted variable indirect costs: BFr 500 per hour of professional labour time Budgeted fixed indirect costs: BFr 2,500,000 per month The budgeted billable professional labour-hours per quarter are January-March April-June July-September October-December 20,000 hours 10,000 hours 4,000 hours 6,000 hours Scaramouche pays all tax professionals employed by Tax-Assistance on an hourly basis (BFr 1,500 per hour, including all fringe benefits).