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

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Chirac & Partners 2 Budget for 2009 3 Professional labor compensation 4 Audit support department costs 5 Professional labor-hours billed to clients $960,000 S720,000 16,000 hours 6. 7 Actual results for 2009 8 Audit support department costs 9 Professional labor-hours billed to clients 10 Actual professional labor cost rate S744,000 15,500 hours $58 per hour