rée pools cost P9-8 Allocations using simplified costing versus activity-based c
ID: 2579108 • Letter: R
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rée pools cost P9-8 Allocations using simplified costing versus activity-based cost Williams and DiMaggio, architects, have been using a sim costing system in which all professional labor costs are incl a single direct cost category, professional labor; and all ov costs are included in a single indirect cost pool, professional port, and allocated to jobs using professional labor hours as the allocation base. Consider two clients: Mays Products, which required 50 hours of design work for a new addition, and Ruth Markets which required plans for a new store that took 20 hours to draw. The firm has two partners, who each earn a salary of $150,000 a year, and four associates who each earn $60,000 per year. Each professional has 1,500 billable hours per year. The pro- fessional support is $360,000, which consists of $120,000 of design support and $240,000 of administrative support. Mays' job required 30 hours of partner time and 20 hours of associate time. Ruth's job required 5 hours of partner time and 15 hours of associate time. nor costs on all overhead plif cluded in sup- Similar to f-Study Problem 1 Required: 1. Prepare job cost sheets for Mays Products and Ruth's Markets, using a simplified costing system with one direct and one indi- rect cost pooi 2. Prepare job ooct shcess for the two clients, using an activity-based costing system with two direct cost categories, partner labor and associate labor, and two indirect cost categories, design support and staff support. Use professional labor dollars as the cost allo- cation base for design support and professional labor hours for staff support. (Round rates to two decimal places.) ing cimplified costingExplanation / Answer
Data for simplified costing system
Data for activity based costing system
1. Using simplified costing system
Job Cost Sheet
MAYA PRODUCTS
RUTH'S MARKET
2. Using Activity Based Costing System
Job Cost Sheet
MAYA PRODUCTS
RUTH'S MARKET
Particulars Amount Total Partners Salary ($150,000 x 2) $300,000 Total Associate Salary ($60,000 x 4) $240,000 Total Direct Cost $540,000 Total Billable Hours (1,500 x 6) 9,000 Cost per billable hour $60Related Questions
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