answer in detail with alm requirements

Activity Based Costing and Activity-Based Management Job costing with multiple direct-cost categories, single indirect-cost pool, law firm Wharton Associates is a recently formed law partnership. Wharton Associates operates at capacity and uses a cost-based approach to pricing (billing) each job. Currently it uses a simple costing system with a single direct-cost category (professional labor-hours) and a single indirect-cost pool (general support). Indirect costs are allocated to cases on the basis of professional labor-hours per case. The job files for two of Wharton's clients, Steger Enterprises and Bluestone, 4 Inc., can be found on the "JOBFILES" tab. 5 Denise Peyton, the managing partner of Wharton Associates, asks her assistant to collect details on those costs included in the $500,000 indirect-cost pool that can be traced to each individual job (see "JOBFILES" tab for details). After analysis, Wharton is able to reclassify $300,000 of the $500,000 as direct costs. The direct 6 costs can be found on the "JOBFILES" tab. 7 Peyton decides to calculate the costs of each job as if Wharton had used six direct- cost pools and a single indirect-cost pool. The single indirect-cost pool would have $200,000 of costs and would be allocated to each case using the professional 8 labor-hours base. 9 10. Use the blue shaded areas on the ENTERANSWERS tab for Inputs. INSTRUCTIONS JOBFILES ENTERANSWERS Denise Peyton, the managing partner of Wharton Associates, asks her assistant to collect details on those costs included in the $500,000 indirect-cost pool that can be traced to each individual job (see "JOBFILES" tab for details). After analysis, Wharton is able to reclassify $300,000 of the $500,000 as direct costs. The direct costs can be found on the "JOBFILES" tab. Peyton decides to calculate the costs of each job as if Wharton had used six direct- cost pools and a single indirect-cost pool. The single indirect-cost pool would have $200,000 of costs and would be allocated to each case using the professional labor-hours base. Use the blue shaded areas on the ENTERANSWERS tab for inputs. Always use cell references and formulas where appropriate to receive full credit. If 1 copy/paste from the Instruction tab you will be marked wrong. 2 3 Requirements 1 Calculate the revised indirect-cost allocation rate per professional labor-hour 14 for Wharton Associates when total indirect costs are $200,000. 2 Compute the costs of the Steger Enterprises and Bluestone Inc. jobs if Wharton Associates had used its refined costing system with multiple direct- 15 cost categories and one indirect-cost pool. 16 INSTRUCTIONS JOBFILES ENTERANSWERS **DATA SHEET -- DO NOT ENTER ANSWERS HERE** The job files for two of Wharton's clients, Steger Enterprises and Blueston Inc., show the following: Steger Enterprises Bluestone Inc. 5 Professional labor hours 3,000 2,000 5 Professional labor costs at Wharton Associates are $160 an hour. Indirect costs are allocated to cases at $100 an hour. 7 Total indirect costs in the most recent period were $500,000. 8 Total cost of the jobs using the simple costing system are as 9 follows: 10 11 Steger Enterprises Bluestone Inc. 12 Direct professional labor $480,000 $320,000 13 Indirect costs allocated 300,000 200,000 14 Total $780,000 $520,000 15 16 17 Other Direct Costs Steger Enterprises Bluestone Inc. 18 Research support labor $36,000 $77,000 19 Computer time 8,000 32,000 Professional labor hours 3,000 2,000 Professional labor costs at Wharton Associates are $160 an hour. Indirect costs are allocated to cases at $100 an hour. Total indirect costs in the most recent period were $500,000. 5 Total cost of the jobs using the simple costing system are as follows: 0 1 Steger Enterprises Bluestone Inc. 2 Direct professional labor $480,000 $320,000 3 Indirect costs allocated 300,000 200,000 4 Total $780,000 $520,000 5 6 17 Other Direct Costs Steger Enterprises Bluestone Inc. 18 Research support labor $36,000 $77,000 19 Computer time 8,000 32,000 20 Travel and allowances 14,000 84,000 21 Telephone/faxes 5,000 24,000 22 Photocopying 6,000 14,000 23 Total $69,000 $231,000 24 INSTRUCTIONS JOBFILES ENTERANSWERS D 1. Calculate the revised indirect-cost allocation rate per professional labor-hour for Wharton Associates when total indirect costs are $200,000. (Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from the Instruction tab you will be marked wrong. ) 3 per professional labor hour 5 2. Compute the costs of the Steger Enterprises and Bluestone Inc. jobs if Wharton Associates had used its refined costing system with multiple direct-cost categories and one indirect-cost pool. (Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from 7 the Instruction tab you will be marked wrong.) 4 6 8 9 Steger Enterprises Bluestone Inc. 10 Direct costs: 11 Direct professional labor 12 Research support labor 13 Computer time Travel and allowances 15 Telephone/faxes 16 Photocopying 17 Total direct costs 18 Indirect costs allocated 19 Total costs of job 2. Compute the costs of the Steger Enterprises and Bluestone Inc. jobs if Wharton Associates had 5 used its refined costing system with multiple direct-cost categories and one indirect-cost pool. (Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from 7 the Instruction tab you will be marked wrong. ) 8 Steger Enterprises Bluestone Inc. 9 10 Direct costs: 11 Direct professional labor 12 Research support labor 13 Computer time 14 Travel and allowances 15 Telephone/faxes 16 Photocopying Total direct costs 18 Indirect costs allocated 19 Total costs of job 20 21 INSTRUCTIONS JOBFILES ENTERANSWERS