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chapter: Job Costing 4-46. JOB COSTING, SERVICE INDUSTRY. Emerson Associates (EA) provides market analysis services for clients. Consultants contract with clients to perform jobs for
chapter: Job Costing 4-46. JOB COSTING, SERVICE INDUSTRY. Emerson Associates (EA) provides market analysis services for clients. Consultants contract with clients to perform jobs for predetermined fees. All jobs feature the work of one professional consultant, and some larger jobs include additional support labor. Because of this, EA's normal-costing system includes two direct cost pools, professional labor and support labor, and one indirect cost pool, overhead. EA charges $80/hour to jobs for professional labor and charges $50/hour for support labor. Overhead is applied to jobs at a rate of $30 per labor-hour, whether professional or support. This rate was determined based on an annual estimated overhead cost of $600,000 and estimated labor-hours of 20,000 (10,000 professional hours and 10,000 support hours). Actual overhead in May was $50,000. EA tracks job costs in an account titled Jobs in Process (JIP). When the job is completed, costs are closed out to Cost of Completed Jobs (COCJ). Following is cost information for May 2020: Client Professional Labor $40,000 From Beginning JIP Support Labor $22,000 Overhead Allocated $28,200 Incurred in May Professional Support Labor Hrs. Labor Hrs. 140 hrs 150 hrs
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