1. Compute the 2017 budgeted direct-cost rates for (a) professional partners and
ID: 2402796 • Letter: 1
Question
1. Compute the 2017 budgeted direct-cost rates for (a) professional partners and (b) professional associates.
2. Compute the 2017 budgeted indirect-cost rates for (a) general support and (b) secretarial support.
3. Compute the budgeted costs for the Richardson and Punch jobs, given the following information:
Richardson, Inc.
Punch, Inc.
Professional partners
32 hours
27 hours
Professional associates
48 hours
108 hours
4. Comment on the results in requirement 3. Why are the job costs different from those computed using the firm's previous method?
5. Would you recommend KinnettKinnett & Associates use the job-costing system in the previous method or the job-costing system in this problem? Explain.
Richardson, Inc.
Punch, Inc.
Professional partners
32 hours
27 hours
Professional associates
48 hours
108 hours
Kinnett & Associates is a law firm specializing in labor relations and employee-related work. It employs 20 professionals 5 partners and 15 associates) who work directly with its clients. Previously the firm accounted for all professional labor cost in a single direct-cost account and all other costs in a single indirect-cost pool Kinnett has just completed a review of its job-costing system. ? (Click the icon to view the job-costing review information.) Budgeted information for 2017 related to the two direct-cost categories is as follows: EB (Click the icon to view the budgeted information.) Read the requirements. ?(Click the icon to view the cost information and rates under the previous method.) Data Table Requirement 1. Compute the 2017 budgeted direct-cost rates for (a) professional partners and (b) professional associates. Begin by selecting the formula, then enter the amounts to compute both rates. (Abbreviations used: Assoc. = Associate.) Budgeted direct- cost rate per hour per hour per hour Partner Assoc.Explanation / Answer
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1. budgeted direct-cost rates for (a) professional partners Compensation per professional/Billable hours per professional 165000/1250 132 (b) professional associates Compensation per professional/Billable hours per professional 75000/1250 60 budgeted indirect-cost rates for (a) general support Total Costs/Professional Labor Hours 1375000/(1250*20) 55 (b) secretarial support. Total Costs/Partners Labor Hours 375000/(1250*5) 60 3. budgeted costs Richardson Punch Direct Cost: Professional Partners 32*132; 27*132 4224 3564 Professional Associates 48*60; 108*60 2880 6480 Indirect Cost: General Support 80*55; 135*55 4400 7425 Secretarial Support 32*60: 27*60 1920 1620 Total Cost 13424 19089 4. Difference is due to mix of Professional Partners and Associates Punch needs more of Associates Labor hour and hence causing the difference 5. Its better to use system mentioned in problem as this will take into consideration partner and associate MixRelated Questions
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