Question

Braun Brothers, Inc., is an architecture firm specializing in high- rise buildings. Its job- costing system has a single direct- cost category (architectural labor) and a single indirect- cost pool, which contains all costs of supporting the office. Office support costs are allocated to individual jobs using architect labor- hours. Braun Brothers employs 15 architects.
Budgeted and actual amounts for 2012 are as follows:

Braun Brothers, Inc.
Budget for 2012
Architect labor cost................. $ 3,613,500
Office support costs................. $ 2,226,500
Architect labor- hours billed to clients ......... 36,500 hours
Actual results for 2012
Office support costs ................ $ 2,340,000
Architect labor- hours billed to clients........ 39,000 hours
Actual architect labor cost rate ......... $ 103 per hour

1. Compute the direct- cost rate and the indirect- cost rate per architectural labor- hour for 2012 under
(a) Actual costing,
(b) Normal costing, and
(c) The variation from normal costing that uses budgeted rates for direct costs.
2. Which job- costing system would you recommend Braun Brothers use? Explain.
3. Braun Brothers’ architectural sketches for Champ Tower in Houston was budgeted to take 380 hours of architectural labor time. The actual architectural labor time spent on the job was 340 hours. Compute the cost of the Champ Tower sketches using
(a) Actual costing,
(b) Normal costing, and
(c) The variation from normal costing that uses budgeted rates for direct costs.



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  • CreatedJanuary 15, 2015
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