$ Budget for 2018 Professional labour compensation Audit support department costs Professional labour-hours billed to clients $ 975,000 675,000 15,000 hours $ Actual Results for 2018 Audit support department costs Professional labour-hours billed to clients Actual professional labour cost rate 775,000 15,500 hours 55 per hour $ 1. Identify the direct cost rate per professional labour-hour and the indirect cost rate per professional labour-hour for 2018 under (a) actual costing, (b) normal costing, and (c) variation of normal costing that uses budgeted rates for direct costs. 2. The audit of Pierre & Company done in 2018 was budgeted to take 130 hours of professional labour time. The actual professional labour time on the audit was 140 hours. Compute the 2018 job cost using (a) actual costing, (b) normal costing, and (c) variation of normal costing that uses budgeted rates for direct costs. Explain any differences in the job cost. Chirac & Partners is a Quebec-based public accounting partnership specializing in audit services. Its job-costing system has a single direct cost category (professional labour) and a single indirect cost pool (audit support, which contains all costs of the Audit Support Department). Audit support costs are allocated to individual jobs using actual professional labour-hours. Chirac & Partners employs 10 professionals who are involved in its auditing services. Budgeted and actual amounts for 2018 are as follows: (Click the icon to view the budgeted and actual amounts.) Required Requirement 1. Identify the direct cost rate per professional labour-hour and the indirect cost rate per professional labour-hour for 2018 under (a) actual costing, (b) normal costing, and (c) variation of normal costing that uses budgeted rates for direct costs. Begin by identifying the formula to calculate the actual indirect cost rate. = Actual indirect cost rate Identify the formula to calculate the budgeted indirect cost rate. Budgeted indirect cost rate Identify the formula to calculate the budgeted direct cost rate. Budgeted direct cost rate Compute the direct cost rate and the indirect cost rate per professional labour-hour for 2018 under each method. (Round your answers to the nearest whole dollar.) (a) (b) (c) Actual Normal Variation of normal costing costing costing Direct cost rate Indirect cost rate Requirement 2. The audit of Pierre & Company done in 2018 was budgeted to take 130 hours of professional labour time. The actual professional labour time on the audit was 140 hours. Compute the 2018 job cost using (a) actual costing, (b) normal costing, and (c) variation of normal costing that uses budgeted rates for direct costs. Explain any differences in the job cost. Begin by identifying the formulas to calculate the direct and indirect costs under actual costing. (Abbreviation used: qty = quantity.) (a) Actual costing: Direct costs Indirect costs Identify the formulas to calculate the direct and indirect costs under normal costing. (Abbreviation used: qty = quantity.) (b) Normal costing: Direct costs Indirect costs Identify the formulas to calculate the direct and indirect costs under the variation of normal costing. (Abbreviation used: qty = quantity.) (c) Variation of normal costing: Direct costs Indirect costs Compute the cost of the Pierre & Company audit under each of the three methods. (a) Actual (b) Normal (c) Variation of Cost of Pierre audit: costing costing normal costing Direct costs Indirect costs Total job costs Explain any differences in the job cost. the actual professional labour time of 140 hours. The budgeted 130 hours The actual costing figure of $ the normal costing figure of $. This is because the actual indirect cost rate of $ the budgeted indirect cost rate of $ The normal costing figure of $ the variation of normal costing figure of $. This is because the actual direct cost rate of $ the budgeted direct cost rate of $
