Question 6

QUESTION 6 Accounting Company Inc., employs 12 full-time CPAs and 10 employees in the administration that support various services of CPAs. Indirect costs are applied to services on the indirect labor-hour basis (i.e. these are the labour hours of employees in the administration). Following is information for 2018: Indirect costs Annual salary of each CPAs Annual salary of each administration employee Indirect labour hours Budget $ 360,000 $ 118,000 $ 31,500 60,000 Actual 309,000 128,000 32,500 50,000 Assume that Accounting Company Inc., uses a normal costing system. Were indirect costs underallocated or overallocated? By how much ? (do not use comma to separate 000: for example, write $1000 and not $1,000)