Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Coleman and Rizzuto, architects, have been using a simplified costing system in which all professional labor costs are included in a single direct cost category,

Coleman and Rizzuto, architects, have been using a simplified costing system in which all professional labor costs are included in a single direct cost category, professional labor; and all over head costs are included in a single indirect cost pool, professional support, and allocated to jobs using professional labor hours as the allocation base. Consider two clients: Ford Products, which required 50 hours of design work for a new addition, and Mickey's Markets which required plans for a new store that took 20 hours to draw. The firm has two partners, who each earn a salary of $150,000 a year, and four associates who each earn $60,000 per year. Each professional has 1,500 billable hours per year. The professional support is $360,000, which consists of $120,000 of design support and $240,000 of administrative support. Ford's job required 30 hours of partner time and 20 hours of associate time. Mickey's job required 5 hours of partner time and 15 hours of associate time. Required: 1. Prepare job cost sheets for Ford Products and Mickey's Markets, using a simplified costing system with one direct and one indirect cost pool. 2. Prepare job cost sheets for the two clients, using an activity based costing system with two direct cost categories, partner labor and associate labor, and two indirect cost categories, design support and staff support. Use professional labor dollars as the cost allocation base for design support and professional labor hours for staff support. (Round rates to two decimal places.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Current Issues In Auditing

Authors: Michael J Sherer, W Stuart Turley

3rd Edition

1853963658, 978-1853963650

More Books

Students also viewed these Accounting questions

Question

d. Who are important leaders and heroes of the group?

Answered: 1 week ago