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undefined Carlin and Marley, an accounting firm, provides consulting and tax planning services. For many years, the firm's total administrative cost (currently $303,000) has been
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Carlin and Marley, an accounting firm, provides consulting and tax planning services. For many years, the firm's total administrative cost (currently $303,000) has been allocated to services on this basis of billable hours to clients. A recent analysis found that 55% of the firm's billable hours to clients resulted from tax planning services, while 45% resulted from consulting services. The firm, contemplating a change to activity-based costing, has identified three components of administrative cost, as follows: Staff Support In-house computing charges Miscellaneous office costs $ 211,000 61,000 31,000 $ 303,000 Total A recent analysis of staff support found a strong correlation with the number of clients served. In contrast, in-house computing and miscellaneous office cost varied directly with the number of computer hours logged and number of client transactions, respectively. Consulting clients served totaled 40% of the total client base, consumed 35% of the firm's computer hours, and accounted for 20% of the total client transactions. If Carlin and Marley switched from its current accounting method to an activity-based costing system, the amount of administrative cost chargeable to consulting services would: Multiple Choice decrease by $24,400. change by an amount other than those listed. change, but the amount cannot be determined based on the information presented. increase by $24,400. decrease by $54,700. Needham Company uses a job-order costing system. During the month of September, the company worked on three jobs. The job-order cost sheets for the three jobs contained the following information at the end of September: Beginning Balances Direct Materials Direct Labor Job A $ 4,900 1,900 3,300 Job B $3,900 2,500 5,500 Job c $ 6,900 2,900 2,700 The company applies overhead at 120% of direct labor cost. The total cost of Job A at the end of September was: Multiple Choice $20,960. $9,160. $14,060. $15,500Step by Step Solution
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