Job costing, engineering consulting firm. (20-35 minutes) Solucions, SA, an engineering consulting firm, specialises in analysing the structural causes of major building catastrophes. Its job-costing system in 2001 had a single direct-cost category (professional labour) and a single indirect- cost pool (general support). The allocation base for indirect costs is professional labour-costs. Actual costs for 2001 were 

The firm’s data-processing capabilities now make it feasible to trace these costs to individual jobs. The managing partner is considering whether more costs than just professional labour should be traced to each job as a direct cost. In this way, the firm would be better able to justify billings to clients.
In late 2001, arrangements were made to expand the number of direct-cost categories and to trace them to seven client engagements.
Two of the case records showed the following: lo1 

Transcribed Image Text:

Direct costs Professional labour Indirect costs General support Total costs EUR 100 million 190 million EUR 290 million The following costs were included in the general support indirect-cost pool: Technical specialists' costs Telephone/fax machine Computer time Photocopying Total costs EUR 8 million 6 million 37 million 4 million EUR 55 million