Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Chapter 9, Problem 9E
The partners of Rozow and Cardis, CPAs, decide to implement an activity-based costing system for their firm. They identify the following three cost pools and budgeted amounts for each for the coming year:
Compute the budgeted
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Mackenzie Consulting computes the cost of each consulting engagement by adding a portion of the firm wide overhead costs to the labor cost of the consultants on the engagement. The overhead costs are assigned to each consulting engagement using a cost driver rate based on consultant labor costs. Mackenzie Consulting’s overhead costs are $5 million per year, and total consultant labor cost is estimated at $2.5 million per year.
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Crow Design is an interior design firm. The firm uses a job cost system in which each client is a different "job."Crow Design traces direct labor, licensing costs, and travel costs directly to each job (client). It allocates indirect costs to jobs based on a predetermined indirect cost allocation rate computed as a percentage of direct labor costs.
At the beginning of the current year, managing partner
Brenna Gladstone prepared the following budget:
Direct labor hours (professional). . . . .
8,000 hours
Direct labor costs (professional). . . . .
$1,600,000
Support staff salaries. . . . . . . . . . . . . . .
$190,000
Computer lease payments. . . . . . . . . . .
$41,000
Office supplies. . . . . . . . . . . . . . . . . . . . .
$23,000
Office rent. . . . . . . . . . . . . . . . . . . . . . . . .
$66,000
Later that same year in November,
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Koffler Legal & Consulting Services PLLC., provides legal consulting services to
businesses in NYc. They follow a job-costing system with a single direct-cost category
(professional labor costs) and a single indirect-cost pool (legal administration costs).
Actual professional hours are used as allocation base in order to allocate legal
administration costs. Koffler Legal & Consulting Services PLLC., currently has 10
lawyers to perform consulting services. Budgeted and actual amounts for 2019 are as
follows:
Koffler Legal & Consulting Services PLLC.
Budget for 2019
$990,000
$774,000
Professional labor costs
Legal administration costs
Professional labor-hours billed to customers
18,000 hours
Actual Results for 2019
Legal administration costs
Professional labor-hours billed to customers
$735,000
17,500
$59 per hour
Actual professional labor cost rate
1. Consider (a) actual costing, (b) normal costing, and (c) a mixed costing approach,
which is a variation from normal costing where…
Chapter 9 Solutions
Principles of Cost Accounting
Ch. 9 - Give at least five examples of service...Ch. 9 - Prob. 2QCh. 9 - What factors help to explain the growth of service...Ch. 9 - What type of costing system do most service...Ch. 9 - What factors would you consider in deciding...Ch. 9 - Distinguish between a direct cost and an indirect...Ch. 9 - What are the elements of a cost performance...Ch. 9 - Prob. 8QCh. 9 - Why is it important for professional labor hours...Ch. 9 - Prob. 10Q
Ch. 9 - Explain how a budgeted income statement for a...Ch. 9 - What are the two main things that an...Ch. 9 - Prob. 13QCh. 9 - Prob. 14QCh. 9 - Explain the concept of a cost/benefit decision and...Ch. 9 - Prob. 16QCh. 9 - Prob. 17QCh. 9 - Prob. 18QCh. 9 - Prob. 19QCh. 9 - Prob. 20QCh. 9 - Prob. 21QCh. 9 - Prob. 22QCh. 9 - Prob. 23QCh. 9 - Prob. 24QCh. 9 - Compute the budgeted overhead rate for the coming...Ch. 9 - Compute the profit or loss on the job in (a)...Ch. 9 - Prepare a revenue budget for the year ending...Ch. 9 - Prepare a budgeted income statement for the month...Ch. 9 - Prepare a budgeted income statement for the month...Ch. 9 - Compute the budgeted overhead rates for each of...Ch. 9 - Prob. 7ECh. 9 - Prob. 8ECh. 9 - Compute the budgeted overhead rates for each of...Ch. 9 - From the following list of performance measures,...Ch. 9 - Luxe Inc., a chain of gasoline service stations,...Ch. 9 - Basic Inc., a chain of gasoline service stations,...Ch. 9 - Categorize each of the following quality costs as...Ch. 9 - Prob. 1PCh. 9 - 1. Prepare a cost performance report. 2. Compute...Ch. 9 - 1. Prepare a revenue budget. 2. Prepare a...Ch. 9 - 1. Prepare an Overhead budget. 2. Prepare an Other...Ch. 9 - Using the information for Crable and Tesch, the...Ch. 9 - Compute the budgeted overhead rate for each of the...Ch. 9 - Compute the budgeted overhead rate for each of the...Ch. 9 - Prob. 8PCh. 9 - Prob. 9PCh. 9 - Prepare a balanced scorecard, without numbers, for...Ch. 9 - Prepare a balanced scorecard for Delhi Dairies,...Ch. 9 - Prob. 12PCh. 9 - Prob. 13PCh. 9 - Prob. 1MC
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