Budget for 2017 Professional labor compensation $960,000 Audit support department costs 720,000 Professional labor-hours billed to clients 16,000 hours Actual results for 2017 Audit support department costs $744,000 Professional labor-hours billed to clients 15,500 hours Actual professional labor cost rate $53 per hour

1. Compute the direct-cost rate and the indirect-cost rate per professional labor-hour for 2017 under (a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs.

Actual Costing Normal Costing Normal Costing Direct-cost rate Indirect-cost rate

Cheneys 2017 audit of Pierre & Co. was budgeted to take 170 hours of professional labor time. The actual professional labor time spent on the audit was 185 hours. Compute the cost of the Pierre & Co. audit using (a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs.

Cost of Pierre audit: Actual Costing Normal Costing Variation of Normal Costing

Direct-costs Indirect-costs Total job costs