2) Craig's Honest Accounting (CHA) Corporation is a accounting firm specializing in external audits. They charge customers a billing rate equal to 225% of the client's total job cost. A client's job cost is a combination of 1) direct labour hours (at $85 an hour) and 2) Operating overhead allocated to the client's job. All operating overhead costs are assigned based on direct labour hours (they expect to have 1,800 total direct labour hours on the year). However, CHA is interested in changing to Activity Based Costing to estimate total overhead costs. Total activity cost, cost drivers and total usage of the drivers are estimated below estimate total overhead costs. Total activity cost, cost drivers and total usage of the drivers are estimated below Total Usage Activity Transportation Budgeted Overhead Cost $ 18,000 Allocation Base Number of KM's 2,500 Kms 1,200 Office Supplies $ 6,000 Boxes of paper used boxes 4,000 Office Support $ Total $ 60,000 84,000 Admin Time hours a) Job #1 took 150 direct labour hours, had 1,000 kms of travel, used 400 boxes of paper and 350 hours of admin time. Estimate the total job cost and amount charged to the client under the current job costing system. =84000/1800-46.67 Predetermined MOH Rate Total Job Cost-46.67 150+85*150-7,000.50+12,750-19,750.50 Amount Charged 19.750.50*2.25-44,438.63 b) Calculate the cost and amount charged to the client of Job #1 under the proposed ABC system. Transportation 18,000/2,500-7.20 Office Supplies 6,000/1200-5 Office Support=60,000/4000-15 d) What is t -175 30 -52,500 -1,373,3 -572.24 e) What jc f) Assun Comp recor Total Job Cost-85 150+1000 7.20+400 5+350 15-12.750+7,200+2,000+5,250) -27,200 -27,200*2.25-61,200 c) Job #2 took 250 direct labour hours, had 200 Kms of travel, used 100 boxes of paper and 45 hours of admin time. Estimate the total job cost and amount charged to the client under the current job costing system. 46.67*250+85*250-11,667.50+21,250-32,917.50-Total Job Cost Amount Charged 32.917.50 2.25-74,064.38 d) Calculate the cost and amount charged to the client of Job #2 under the proposed ABC system, -85*250+200 7.20+100*5+45 15-21,250+1,440+500+675-23,865 -23865 2.25-53,696.25 e) Which job costing system is fairer for clients? Explain