Question Help P5-32 (similar to) is a recently formed law partnership. Vrabel Associates operates at capacity and uses a cost-based approach to pricing (biling) each job. Currently it uses a simple costing system with a single direct-cost category (professional labor-hours) and a single indirect-cost pool (general support). Indirect costs are allocated to cases on the basis of s per case. The job files for two of Vrabelrs clients, Jabar Enterprises and Pearl Inc., show the following BEB (Click the icon to view the data using the simple costing system) EEB (Click the icon to view additional data) Read the cequirements Requirement 1. Calculato the revised indirect-cost allocation rate per professional labor-hour for Vrabel Associates when total indirect costs are $200,000 First determine the formula used to calculate the indirect-cost rate. Then enter the amounts in the formula and calculate the rate per hour (Abbreviation used prof. professional) from any dro list and then click Check Answer Data Table formed law g (billing) each job. s are allocated to ca ect-cost ca se. The job data using t Pearl Inc. Jabar Enterprises tional data Professional labor 2,600 hours 2,400 hours Professional labor costs at Vrabel Associates are $240 an hour. Indirect costs are allocated to cases at $120 an hour. Total indirect costs in the most recent period osts are $200,000. revised indi were $600,000 Total cost of the jobs using the simple costing system are as follows: ed to calcula (Abbreviation used Pearl Jabar Enterprises Inc. Direct professional labor624,000 $ 576,000 312,000 288,000 Indirect costs allocated 936,000 $ 864,000 Total list and the Print Done data usi Whitney Hamilton, the managing partner of Vrabel Associates, asks her assistant to collect details on those costs included in the $600,000 indirect-cost pool that can be traced to each individual job. After analysis, Vrabel is able to reclassify $400,000 of the $600,000 as direct costs itional da 200 revised Pearl Inc. Other Direct Costs Jabar Enterprises atio ed to ca 198,000 Research support labor 41,000 $ 4,000 27,000 Computer time 76,000 Travel and allowances 12,000 2,000 Telephones/faxes 19,000 6,500 14,500 Photocopying 65,500 $ 334,500 Total list and Print Done formed Data Table ct-cost e. The ata usi direct costs: onal da Other Direct Costs Jabar Enterprises Pearl Inc. Research support labor 41,000 $ 198,000 evised Computer time 4,000 27,000 Travel and allowances to cal 12,000 76,000 Telephones/faxes 2,000 19,000 14,500 6,500 Photocopying 65,500 $ 334,500 Total Hamilton decides to calculate the costs of each job as if Vrabel had used six direct-cost pools and a single indirect-cost pool. The single indirect-cost pool would have $200,000 of costs and would be allocated to each case using the professional labor-hours base ale por posional labor-hour 1. Calculate the revised indirect-cost allocation rate per professional labor-hour for Vrabel Associates when total indirect costs are $200,000. 2. Compute the costs of the Jabar Enterprises and Pearl Inc. jobs if Vrabel Associates had used its refined costing system with multiple direct-cost categories and one indirect-cost pool 3. Compare the costs of Jabar Enterprises and Pearl Inc. jobs in requirement 2 with those calculated using the simple costing system. Comment on the results
