Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Answer plz Adler & Company is an architectural firm specializing in home remodeling for private clients and new office buildings for corporate clients. Adler charges

Answer plzimage text in transcribedimage text in transcribed

Adler & Company is an architectural firm specializing in home remodeling for private clients and new office buildings for corporate clients. Adler charges customers at a billing rate equal to 138% of the client's total job cost. A client's total job cost is a combination of (1) professional time spent on the client ($62 per hour cost of employing each professional) and (2) operating overhead allocated to the client's job. Adler allocates operating overhead to jobs based on professional hours spent on the job. Adler estimates its five professionals will incur a total of 10,000 professional hours working on client jobs during the year. (Click the icon to view the operating cost information.) Anne Lee hired Adler to design her kitchen remodeling. A total of 35 professional hours were incurred on this job. In addition, Lee's remodeling job required one of the professionals to travel back and forth to her house for a total of 135 miles. The blueprints had to be copied four times because Lee changed the plans several times. In addition, 18 hours of secretarial time were used lining up the subcontractors for the job. Read the requirements - X Requirements Determine the formula, then calculate the activity cost allocation rates that could be used to allocate operating overhead costs to client jobs = Activity cost allocation ratu Transportation to clients + per mile Blueprint copying + per copy Office support + per secretarial hour 1. Calculate the current indirect cost allocation rate per professional hour. 2. Calculate the total amount that would be billed to Lee given the current costing structure 3. Calculate the activity cost allocation rates that could be used to allocate operating overhead costs to client jobs. 4. Calculate the amount that would be billed to Lee using ABC costing. 5. Which type of billing system is more fair to clients? Explain. = Requirement 4. Calculate the amount that would be billed to Lee using ABC costing Determine the formula, then calculate the amount that would be billed to Lee using ABC coating. (Round all amounts to the nearest cent.) = Amount billed to client Print Done operating receiving Requirement 5. Which type of billing system is more fair to clients? Explain. selling The billing system is more fair to clients because they are charged according to For example, copying blueprints is . Under the fairer system, clients are charged incurred by each unique client job. y blueprint copies that their job required. The fairer system better recognized the extent to which Y costs are Time Remaining: 03:21:29 Next Adler & Company is an architectural firm specializing in home remodeling for private clients and new office buildings for corporate clients. Adler charges customers at a billing rate equal to 138% of the client's total job cost. A client's total job cost is a combination of (1) professional time spent on the client (562 per hour cost of employing each professional) and (2) operating overhead allocated to the client's job. Adler allocates operating overhead to jobs based on professional hours spent on the job. Adler estimates its five professionals will incur a total of 10,000 professional hours working on client jobs during the year. (Click the icon to view the operating cost information.) Anne Lee hired Adler to design her kitchen remodeling. A total of 35 professional hours were incurred on this job. In addition, Lee's remodeling job required one of the professionals to travel back and forth to her house for a total of 135 miles. The blueprints had to be copied four times because Lee changed the plans several times. In addition, 18 hours of secretarial time were used lining up the subcontractors for the job. Read the requirements. . X Data Table Requirement 1. Calculate the current indirect cost allocation rate per professional hour. (Round your answer to the nearest cent.) . The current indirect cost allocation rate per professional hour is 27.1 Requirement 2. Calculate the total amount that would be billed to Lee given the current costing structure. . Determine the formula, then calculate the amount that would be billed to Lee given the current costing structure. (Round all amounts to the ne = Amount billed to client All operating costs other than professional salaries (travel reimbursements, copy costs, secretarial salaries, office lease, and so forth) can be assigned to the three activities. Total activity costs, cost drivers, and total usage of those cost drivers are estimated as follows: Total Total Usage Activity by Corporate Total Usage by Activity Cost Cost Driver Clients Private Clients Transporation to Round-trip clients...........$ 12,000 mileage to clients. 3,000 miles 12.000 miles Blueprint copying 34,000 Number of copias. 300 copies 700 copies 2,400 secretarial 2,600 secretarial Office support.... . hours hours Total operating $ 271,000 overhead......... R 225,000 Secretarial time Operating overhead D Total cost of job + vity cost allocation rates that could be used to allocate operating overhead costs to client jobs. ate the activity cost allocation rates that could be used to allocate operating overhead costs to client jobs. = Activity cost allocation rate = per mile + = | per copy per secretarial hour Transportation to clients Blueprint copying Office support Print Done

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of International Financial Accounting And Reporting

Authors: Roger Hussey

1st Edition

9814280232, 9789814280235

More Books

Students also viewed these Accounting questions

Question

Evaluate: xy dydc 0 243/2 0 729/2 0 81 0 729/8

Answered: 1 week ago

Question

What are the organizations reputation goals on this issue?

Answered: 1 week ago

Question

What change do you need to make to achieve the desired position?

Answered: 1 week ago