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Service Industry Job Costing Two Direct Two Indirect Cost Categories Keating Completed R Q17787532

Service industry ~ Job costing with two direct and twoindirect cost categories
           Keating has just completed a review of its job-costing system. Thisreview included a detailed analysis of how past jobs used thefirm’s resources and interviews with personnel about what factorsdrive the level of indirect costs. Management concluded that asystem with two direct-cost categories (professional partner laborand professional associate labor) and two indirect cost categories(general support and secretarial support) would yield more accuratejob costs. Budgeted information for the current year related to thetwo direct-cost categories is as follows:
Professional Partner Labor Professional Associate Labor Numberof Professionals 5 20 Hours of billable time per professional 1,600per year 1,600 per year Total compensation (average perprofessional) $200,000 $80,000 Budgeted information for the currentyear relating to the two indirect-cost categories is as follows:General Support Secretarial Support Total costs $1,800,000 $400,000Cost-allocation base Professional labor hours Partner labor hours1. Compute the annual budgeted direct-cost rates for (a)professional partners and (b) professional associates. 2. Computethe annual budgeted indirect cost rates for (a) general support and(b) secretarial support. 3. Compute the budgeted costs for theRichardson and Punch jobs, given the following information:Richardson, Inc. Punch, Inc. Professional partners 60 hours 25hours Professional associates 40 hours 125 hours 4. Comment on theresults in requirement 3. Why are the job costs different fromthose computed in HW #6?
 
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