Although job-order costing was originally developed for use in manufacturing environments, it is equally applicable in organizations that provide services rather than manufactured goods. A public accounting firm is one such organization.
Required:
Develop a list of “products” provided by the employees and partners of a typical public accounting office in your area. Next, develop a list of costs that would be incurred to provide each product/service in your first list. Consider which of these costs are direct and which are indirect (i.e.. overhead), and identify an appropriate cost driver for each overhead type. How might this information be used to determine the price to charge one client of the public accounting firm for audit services in the coming year?