Question: Prior to instituting an activity based costing system Mason and Hutton
Prior to instituting an activity-based costing system, Mason and Hutton, the attorneys in E9-6 and E9-7, utilized a simplified costing system with one direct cost category, professional labor, and one indirect cost category, professional support. The average wage rate for professional labor was $73 per hour, and the overhead rate for professional support was $67.50 per professional labor hour. Compute the job cost for Jim Adams, the client in E9-7, using the simplified costing system, and determine the difference between it and the job cost using activity-based costing in E9-7 and discuss the reasons for the difference.
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