Question
McKenna Collins LLP public accounting firm employs 10 full-time professionals who provide services to clients. All professional labour compensation is traced directly to clients on
McKenna Collins LLP public accounting firm employs 10 full-time professionals who provide services to clients. All professional labour compensation is traced directly to clients on a per professional labour-hour basis. Any other costs are included in a single indirect-cost pool (same as overhead) and allocated to individual clients according to billable professional labour-hours.
Operating costs and data for the year included the following:
EstimatedActual
Overhead (indirect) costs$1,000,000$1,200,000
Number of billable professional labor-hrs40,00050,000
Total professional compensation750,000750,000
How do I explain qualitatively and quantitatively (in as much detail as possible) the source(s) of any underapplied or overapplied overhead cost?
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