Homework: HW3 Chapter 4 Question 2, P4-38 (simila... HW Score: 61.11%, 6.11 of 10 points Part 2 of 7 Points: 1.11 of 5 More Info Kidman & Associates is a law firm specializing in labor relations and employee-related work. It employs 25 professionals (5 partners and 20 associates) who work Kidman has just completed a review of its job-costing system. directly with its clients. Previously the firm accounted for all professional labor cost in a single direct-cost account and all other costs in a single indirect-cost pool. i (Click the icon to view the job-costing review information.) This review included a detailed analysis of how past jobs used the firm's resources (Click the icon to view the cost information and rates under the previous method.) and interviews with personnel about what factors drive the level of indirect costs. Budgeted information for 2017 related to the two direct-cost categories is as follows: Management concluded that a system with two direct-cost categories (professional (Click the icon to view the budgeted information.) partner labor and professional associate labor) and two indirect-cost categories (general support and secretarial support) would yield more accurate job costs Read the requirements. - X Requirement 1. Compute the 2017 budgeted direct-cost rates for (a) professional partners and (b) professional associates. Requirements Begin by selecting the formula, then enter the amounts to compute both rates. (Abbreviations used: Assoc. = Associate.) Budgeted direct- 1. Compute the 2017 budgeted direct-cost rates for (a) professional partners and (b) professional associates. Budgeted compensation per professional / Budgeted billable hours per professional = cost rate per hour 2. Compute the 2017 budgeted indirect-cost rates for (a) general support and (b) secretarial support. 3. Compute the budgeted costs for the Richardson and Punch jobs, given the following information: Partner $ 200,000 / 1,600 = $ 125 per hour Richardson, Inc. Punch, Inc. Assoc. 80,000 1,600 = $ 50 per hour Professional partners 30 hours 23 hours Requirement 2. Compute the 2017 budgeted indirect-cost rates for (a) general support and (b) secretarial support. Professional associates 45 hours 92 hours Begin by selecting the formula, then enter the amounts to compute both rates. (Round your answers to the nearest whole dollar.) 4. Comment on the results in requirement 3. Why are the job costs different from those computed using the firm's previous method? 5. Would you recommend Kidman & Associates use the job-costing system in the previous method or the job-costing system in this Budgeted indirect- problem? Explain Budgeted indirect-costs Budgeted quantity of allocation base cost rate per hour General 1800000 8000 = 225 per hour Secretarial 400000 32000 = 12.5 per hour Print Done - X Data Table - X The average budgeted total compensation per professional for 2017 is $104,000. Each professional is budgeted to have 1,600 billable hours to clients in 2017. All Data Table professionals work for clients to their maximum 1,600 billable hours available. All professional labor costs are included in a single direct-cost category and are traced to jobs on a per-hour basis. All costs of Kidman & Associates other than professional labor costs are included in a single indirect-cost pool (legal support) and are allocated to jobs using professional labor-hours as the allocation base. The budgeted level of indirect costs in 2017 is $2,200,000. The cost estimates for the Richardson, Inc. job, which requires 75 budgeted hours of professional labor and for the Punch, Inc. job, which requires 115 budgeted Professional Partner Labor Professional Associate Labor hours of professional labor are as follows: Number of professionals 5 20 Richardson Punch Hours of billable time per professional 1,600 per year 1,600 per year Direct-costs $ 4,875 $ 7,475 Total compensation (average per 200,000 80,000 4.125 6.325 professional) Indirect-costs 9,000 $ 13,800 Budgeted information for 2017 relating to the two indirect-cost categories is as follows: Total costs General Support Secretarial Support Total costs $ 1,800,000 $ 400,000 Cost-allocation base Professional labor-hours Partner labor-hours Print Done Print Done