Cheney & Partners, a Quebec-based public accounting partnership, specializes in audit services. Its job-costing system has a single direct-cost category (professional labor) 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 labor-hours.

Cheney& Partners employs 10 professionals to perform audit services. Budgeted and actual amounts for 2017 are asfollows:

Budget for 2017

Professional labor compensation $990,000

Audit support department costs $774,000

Professional labor-hours billed to clients 18,000 hours

Actual results for 2017

Audit support department costs $735,000

Professional labor-hours billed to clients 17,500 hours

Actual professional labor cost rate $54 per hour

Compute the direct-cost rate and the indirect-cost rate per professionallabor-hour 2017

under (a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs.

2. Which job-costing system would you recommend CheneyCheney & Partners use? Explain.

3. Cheney's 2017 audit of Pierre & Co. was budgeted to take120 hours of professional labor time. The actual professional labor time spent on the audit was 140 hours. Compute the cost of the Pierre & Co. audit using (a) actualcosting, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs. Explain any differences in the job cost.