Question
Apex, Inc., is a technology consulting firm focused on Web site development and integration of Internet business applications. Clients are billed at 160 % of
Apex, Inc., is a technology consulting firm focused on Web site development and integration of Internet business applications. Clients are billed at 160 % of direct labor cost. The president of Apex, Inc., suspects that her allocation of indirect costs could be giving misleading results, so she decides to develop an ABC system. She identifies three activities: documentation preparation, information technology support, and training. She figures that documentation costs are driven by the number of pages, information technology support costs are driven by the number of software applications used, and training costs are driven by the number of direct labor hours worked. Suppose Apex's direct labor rate was $ 300 per hour, the documentation cost was $35 per page, the information technology support cost was $200 per application, and training costs were $100 per direct labor hour. The Crickett engagement used the following resources last month:
Cost Driver | Crickett |
Direct labor hours | 130 |
Pages | 310 |
Applications used | 70 |
Compute the cost assigned to the Crickett engagement, using the ABC system. | |
Compute the operating income from the Crickett engagement, using the ABC system. |
Total Costs=
Operating Income (Loss)
This is all of the information given to me.
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