Question

Bradley has two classifications of professional staff: partners and associates. Harrington asks his assistant to examine the relative use of partners and associates on the recent Campa Coal and St. Edith’s jobs. The Campa job used 50 partner-hours and 100 associate-hours. The St. Edith’s job used 75 partner-hours and 25 associate-hours. Therefore, totals of the two jobs together were 125 partner-hours and 125 associate-hours. Harrington decides to examine how using separate direct-cost rates for partners and associates and using separate indirect-cost pools for partners and associates would have affected the costs of the Campa and St. Edith’s jobs. Indirect costs in each indirect-cost pool would be allocated on the basis of total hours of that category of professional labor. From the total indirect cost-pool of $ 10,000, $ 6,000 is attributable to the activities of partners and $ 4,000 is attributable to the activities of associates. The rates per category of professional labor are as follows:


Required
1. Compute the costs of the Campa and St. Edith’s cases using Bradley’s further refined system, with multiple direct-cost categories and multiple indirect-cost pools.
2. For what decisions might Bradley Associates find it more useful to use this job-costing approach rather than the approaches in Problem 5-30 or5-31?


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  • CreatedMay 14, 2014
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