Anthony Consulting Limited (ACL) provides consulting services to large public corporations. ACL is required to submit...

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Anthony Consulting Limited (ACL) provides consulting services to large public corporations. ACL is required to submit bids to potential customers in a competitive bidding process. ACL has two major cost categories, Professional Salaries and Support Services. ACL bids total cost plus 30% in an attempt to win all competitive contracts. Professional Salaries are a direct cost and are determined based on the hourly rate of the specific consultants and the number of hours on each specific project. Hourly rates differ widely within ACL due to experience and expertise. Allocated Support Service costs are indirect costs and are allocated to projects based on the number of Professional Salary hours per project. Total Support Services Costs for the year were $3,360,000 and total Professional Salary hours were 24,000. ACL is concerned about their current costing system as they are losing a number of bids that they feel are unwarranted. They are considering trying Activity Based Costing and have gathered the following information: Support Services Costs can be further broken down into the following pools and related cost drivers as follows: Overhead Type Cost Cost Driver Total per Year Pool A $1,200,000 Travel Kilometers 960,000 kilometers Pool B $768,000 Number of Documents 384,000 Documents Pool C $1,392,000 Professional Labour Hours 24,000 Hours + Information concerning two competitive bids are presented below: DirectCosts wwwwwwwwwwwwww Comp A3208 Comp A4201 Professional Salaries $45,000 $28,000 Professional Hours 400 260 Kilometers Driven 9,000 21,000 Number of Documents 5,500 7,200 Required 1. Calculate the cost of bids A3208 and A4201 and submitted bid price assuming ACL uses Professional Labour Hours to allocate Support Services Costs. 2. Calculate the rates to be used by ACL if they implement Activity Based Costing 3. Calculate the cost of bids A3208 and A4201 and submitted bid price assuming ACL uses ABC costing. 4. ACL was unsuccessful with one of the above two bids. Which bid do you think was unsuccessful? Explain. 5. Do you think ACL should adopt ABC Costing? Explain. [ + ] Anthony Consulting Limited (ACL) provides consulting services to large public corporations. ACL is required to submit bids to potential customers in a competitive bidding process. ACL has two major cost categories, Professional Salaries and Support Services. ACL bids total cost plus 30% in an attempt to win all competitive contracts. Professional Salaries are a direct cost and are determined based on the hourly rate of the specific consultants and the number of hours on each specific project. Hourly rates differ widely within ACL due to experience and expertise. Allocated Support Service costs are indirect costs and are allocated to projects based on the number of Professional Salary hours per project. Total Support Services Costs for the year were $3,360,000 and total Professional Salary hours were 24,000. ACL is concerned about their current costing system as they are losing a number of bids that they feel are unwarranted. They are considering trying Activity Based Costing and have gathered the following information: Support Services Costs can be further broken down into the following pools and related cost drivers as follows: Overhead Type Cost Cost Driver Total per Year Pool A $1,200,000 Travel Kilometers 960,000 kilometers Pool B $768,000 Number of Documents 384,000 Documents Pool C $1,392,000 Professional Labour Hours 24,000 Hours + Information concerning two competitive bids are presented below: DirectCosts wwwwwwwwwwwwww Comp A3208 Comp A4201 Professional Salaries $45,000 $28,000 Professional Hours 400 260 Kilometers Driven 9,000 21,000 Number of Documents 5,500 7,200 Required 1. Calculate the cost of bids A3208 and A4201 and submitted bid price assuming ACL uses Professional Labour Hours to allocate Support Services Costs. 2. Calculate the rates to be used by ACL if they implement Activity Based Costing 3. Calculate the cost of bids A3208 and A4201 and submitted bid price assuming ACL uses ABC costing. 4. ACL was unsuccessful with one of the above two bids. Which bid do you think was unsuccessful? Explain. 5. Do you think ACL should adopt ABC Costing? Explain. [ + ]

Answer rating: 100% (QA)

1 Costs using labour hours to allocate support services Bid A3208 Professional salaries 45000 Suppor... View the full answer