Job costing; actual, normal and variation from normal costing,
Job costing; actual, normal and variation from normal costing, Chirac & Partners, a Quebec-based public accounting partnership, specializes in audit services, Its job-costing system has a single direct-cost category (professional labor) and a single indirect-cost pool (audit support, which contains all costs of the Audit Support Department). Audit support costs are allocated to individual jobs using actual professional labor-hours. Chirac & Partners employs 10 professionals to perform audit services.
If you want to use Excel to solve this exercise, go to the Excel Lab at www.prenhall.com/horngren/cost13e and download the template for Exercise 4-28.
1. Compute the direct-cost rate and the indirect-cost rate per professional labor-hour for 2009 under
(a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs.
2. Chirac’s 2009 audit of Pierre & Co. was budgeted to take 110 hours of professional labor time. The actual professional labor time spent on the audit was 120 hours. Compute the cost of the Pierre & Co audit using (a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs. Explain any differences in the jobcost