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Be Audit You Can Be is a law firm that defends clients from the IRS. They have a new accounting system that reports the cost
Be Audit You Can Be is a law firm that defends clients from the IRS. They have a new accounting system that reports the cost of client contracts using a normal absorption job-order costing system. Their total overhead is projected to be $2,000,000 for the coming year, of which 40% is allocated on the basis of staff direct labor hours (DLH) and 60% is allocated on the basis of partner direct labor hours (DLH). Be Audit You Can Be projects 8,000 staff DLH and 4,800 partner DLH for the year. The company’s previous accounting system allocated overhead on the basis of total DLH.Circle the letter indicating how changing the accounting system as described changed the reported cost of a job with 100 staff hours and 60 partner hours:Group of answer choicesThere is insufficient information to determine how the change in the accounting system changed the reported cost of the jobThe reported cost of the job did not change due to the change in the accounting systemThe reported cost of the job fell due to the change in the accounting systemThe reported cost of the job rose due to the change in the accounting system
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