Q2) March 27, Service industry. job costing, law firm. Keating & Associates is a law firm specializing in labor rela- tions and employee-related work. It employs 25 professionals (5 partners and 20 associates) who work directly with its clients. The average budgeted total compensation per professional for 2011 is $104,000. Each professional is budgeted to have 1,600 billable hours to clients in 2011. All 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 Keating & Associates other than professional labor costs are included in a single indirect-cost pool (legal support) and are allocated to jobs using profes- sional labor-hours as the allocation base. The budgeted level of indirect costs in 2011 is $2,200,000. 1. Prepare an overview diagram of Keating's job-costing system. 2 Compute the 2011 budgeted direct-cost rate per hour of professional labor 3. Compute the 2011 budgeted indirect-cost rate per hour of professional labor. 4. Keating & Associates is considering bidding on two jobs: a. Litigation work for Richardson, Inc., which requires 100 budgeted hours of professional labor b. Labor contract work for Punch, Inc., which requires 150 budgeted hours of professional labor Prepare a cost estimate for each job. Required @1) Normal costing, overhead allocation, working backward. Gibson Manufacturing uses normal costing for its job-costing system, which has two direct-cost categories (direct materials and direct manufacturing labor) and one indirect-cost category (manufacturing overhead). The following information is obtained for 2011: Total manufacturing costs, $8,000,000 Manufacturing overhead allocated, 3,600,000 (allocated at a rate of 200% of direct manufacturing labor costs) Work-in-process inventory on January 1, 2011, $320,000 Cost of finished goods manufactured, 57,920,000 1. Use information in the first two bullet points to calculate (a) direct manufacturing labor costs in 2011 and (b) cost of direct materials used in 2011. 2. Calculate the ending work-in-process inventory on December 31, 2011 Required 03) Allocation and proration of overhead. Tamden, Inc., prints custom marketing materials. The busi- ness was started January 1, 2010. The company uses a normal-costing system. It has two direct cost pools, materials and labor and one indirect cost pool , overhead. Overhead is charged to printing jobs on the basis of direct labor cost. The following information is available for 2010 Budgeted direct labor costs $150,000 Budgeted overhead costs $180,000 Costs of actual material used $126,500 Actual direct labor costs $148,750 Actual overhead costs $175,000 There were two jobs in process on December 31, 2010: Job 11 and Job 12. Costs added to each job as of December 31 are as follows: Job 11 Job 12 Direct materials Direct labor $3,620 $4,500 $6,830 $7,250 Required Tamden, Inc., has no finished goods inventories because all printing jobs are transferred to cost of goods sold when completed. 1. Compute the overhead allocation rate. 2. Calculate the balance in ending work in process and cost of goods sold before any adjustments for under-or overallocated overhead. 3. Calculate under-or overallocated overhead. 4. Calculate the ending balances in work in process and cost of goods sold if the under- or overallocated overhead amount is as follows: a. Written off to cost of goods sold b. Prorated using the ending balance (before proration) in cost of goods sold and work-in-process con- trol accounts 5. Which of the methods in requirement 4 would you choose? Explain