4. Job costing in a service business Diego, Hyatt, and Stevens, a prestigious law firm located in San Antonio, uses job order system to monitor the cost of servicing dientele. The office manager has prepared the following budget for 20X7 511,520,000 Client billings Les Professional staff costs (5) Administrative staff costs (75) S6000,000 2.000.000 500.000 Computer time Photocopying (70) Other office costs (20) 300.000 90000 Net income 5 2.5.2010 The numbers in parentheses indicate the petcentage of cost that is directly traceable lo client jobs. The remaining, nontraceable portion is charged to dients by using a predetermined overhead application rate. The office manager feels that total direct cost is the most appropriate overhead application base In March, the firm completed work on a suit for Picante Foods. The following costs were directly chargeable to l'icante I'rofessional staff Administrative staff 6.100 Computer time Photocopying Other office costs 3.700 400 CHAPTER a. Determine the firm's total budgeted traceable and nontraceable costs and the overhead application rate b Calculate the firm's estimated income for the vear as a percentage of traceable costs. c. Compute the total cost of the Pacante job and the amount that Dugo, Hyatt and Stevens would bill the client d. The office manager can acquire new software that would allow the firm to increase the percentage of direct (as opposed to indirect) costs. Briefly explain why Diego Hyatt and Stevens would be interested in this software Instructions a. Determine the firm's total budgeted traceable and nontraceable costs and the overhead application rate. b. Calculate the firm's estimated income for the year as a percentage of traceable costs. c. Compute the total cost of the Picante job and the amount that Diego, Hyatt, and Stevens would bill the client, d. The office manager can acquire new software that would allow the firm to increase the percentage of direct (as opposed to indirect) costs. Briefly explain why Diego, Hvalt, and Stevens would be interested in this software 1. Job costing in a service business Diego, Hyatt, and Stevens, a prestigious law firm located in San Antonio, uses a job order system to monitor the cost of servicing dientele. The office manager has prepared the following budget for 20X7: $11.520.000 S6.000.000 2.000.000 Client billings Less: Professional staff costs (85) Administrative staff costs (75) Computer time (80) Photocopying (70) Other office costs (20) 500.000 200 000 300.000 9000 $ 2.520 000 The numbers in parentheses indicate the percentage of cost that is directly traccable to client jobs. The remaining, nontraceable portion is changed to clients by using a predetermined overhead application rate. The office manager feels that total direct cost is the most appropriate overhead application base In March the firm completed work on a suit for Picante Foods. The following costs were directly chargeable to Picante Profesional staff Administrative staff 525.000 6.400 2.500 4. Job costing and overhead application Uniflex applies overhead on the basis of direct labor cost. In December 20X4, the company's cost accountant made the following predictions for 20x5 operations: direct labor cost, $620,000; factory overhead, $961,000. Uniflex worked on job Nos. 241 and 242 in January. The costs incurred and production status of these two jobs appear in the table that follows. Job No. 241 Job No. 242 Direct materials $26,000 $47,000 Direct labor 18,000 24,000 Production status In process In process By the end of 20X5, actual direct labor cost amounted to $612,500, and factory over head incurred totaled $967,500. There was no work in process on January 1, 20X5. Compute the following: a. Uniflex's overhead application rate. b. The balance of the Work in Process account on January 31, 20X5. c. The amount of over- or underapplied overhead for 20X5. Be sure to indicate whether overhead was overapplied or underapplied 51 shine and verbesar la costing in a service business Diego Hyatt, and Stevens, a prestigious law firm located in San Antonio, use a border system to monitor the cost of servicing clientele. The office manager has prepared the following budget for 20X7 $11.520,000 SO Client billings Less Professional staff costs (85) Administrative staff costs (73) Computer time (80) Photocopying (701) Other office costs (2017) 2.000.000 300,000 200,000 Bylorg 100.000 Net income $ 2.520,000 The numbers in parentheses indicate the percentage of cost that is directly traceable to client jobs. The remaining, nontraceable portion is charged to clients by using a predetermined overhead application rate. The office manager feels that total direct cost is the most appropriate overhead application base In March, the firm completed work on a suit for Picante Foods. The following costs were directly chargeable to Picante: Professional statt 2.500 Administrative staff Computer time Photocopying Other office costs 3,700 100 4. Job costing in a service business Diego, Hyatt, and Stevens, a prestigious law firm located in San Antonio, uses job order system to monitor the cost of servicing dientele. The office manager has prepared the following budget for 20X7 511,520,000 Client billings Les Professional staff costs (5) Administrative staff costs (75) S6000,000 2.000.000 500.000 Computer time Photocopying (70) Other office costs (20) 300.000 90000 Net income 5 2.5.2010 The numbers in parentheses indicate the petcentage of cost that is directly traceable lo client jobs. The remaining, nontraceable portion is charged to dients by using a predetermined overhead application rate. The office manager feels that total direct cost is the most appropriate overhead application base In March, the firm completed work on a suit for Picante Foods. The following costs were directly chargeable to l'icante I'rofessional staff Administrative staff 6.100 Computer time Photocopying Other office costs 3.700 400 CHAPTER a. Determine the firm's total budgeted traceable and nontraceable costs and the overhead application rate b Calculate the firm's estimated income for the vear as a percentage of traceable costs. c. Compute the total cost of the Pacante job and the amount that Dugo, Hyatt and Stevens would bill the client d. The office manager can acquire new software that would allow the firm to increase the percentage of direct (as opposed to indirect) costs. Briefly explain why Diego Hyatt and Stevens would be interested in this software Instructions a. Determine the firm's total budgeted traceable and nontraceable costs and the overhead application rate. b. Calculate the firm's estimated income for the year as a percentage of traceable costs. c. Compute the total cost of the Picante job and the amount that Diego, Hyatt, and Stevens would bill the client, d. The office manager can acquire new software that would allow the firm to increase the percentage of direct (as opposed to indirect) costs. Briefly explain why Diego, Hvalt, and Stevens would be interested in this software 1. Job costing in a service business Diego, Hyatt, and Stevens, a prestigious law firm located in San Antonio, uses a job order system to monitor the cost of servicing dientele. The office manager has prepared the following budget for 20X7: $11.520.000 S6.000.000 2.000.000 Client billings Less: Professional staff costs (85) Administrative staff costs (75) Computer time (80) Photocopying (70) Other office costs (20) 500.000 200 000 300.000 9000 $ 2.520 000 The numbers in parentheses indicate the percentage of cost that is directly traccable to client jobs. The remaining, nontraceable portion is changed to clients by using a predetermined overhead application rate. The office manager feels that total direct cost is the most appropriate overhead application base In March the firm completed work on a suit for Picante Foods. The following costs were directly chargeable to Picante Profesional staff Administrative staff 525.000 6.400 2.500 4. Job costing and overhead application Uniflex applies overhead on the basis of direct labor cost. In December 20X4, the company's cost accountant made the following predictions for 20x5 operations: direct labor cost, $620,000; factory overhead, $961,000. Uniflex worked on job Nos. 241 and 242 in January. The costs incurred and production status of these two jobs appear in the table that follows. Job No. 241 Job No. 242 Direct materials $26,000 $47,000 Direct labor 18,000 24,000 Production status In process In process By the end of 20X5, actual direct labor cost amounted to $612,500, and factory over head incurred totaled $967,500. There was no work in process on January 1, 20X5. Compute the following: a. Uniflex's overhead application rate. b. The balance of the Work in Process account on January 31, 20X5. c. The amount of over- or underapplied overhead for 20X5. Be sure to indicate whether overhead was overapplied or underapplied 51 shine and verbesar la costing in a service business Diego Hyatt, and Stevens, a prestigious law firm located in San Antonio, use a border system to monitor the cost of servicing clientele. The office manager has prepared the following budget for 20X7 $11.520,000 SO Client billings Less Professional staff costs (85) Administrative staff costs (73) Computer time (80) Photocopying (701) Other office costs (2017) 2.000.000 300,000 200,000 Bylorg 100.000 Net income $ 2.520,000 The numbers in parentheses indicate the percentage of cost that is directly traceable to client jobs. The remaining, nontraceable portion is charged to clients by using a predetermined overhead application rate. The office manager feels that total direct cost is the most appropriate overhead application base In March, the firm completed work on a suit for Picante Foods. The following costs were directly chargeable to Picante: Professional statt 2.500 Administrative staff Computer time Photocopying Other office costs 3,700 100