Cheney & Partners, a Quebecbased 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. Cheney & Partners employs 10 professionals to perform audit services.

Budgeted and actual amounts for 2017 are as follows:

Required
1. Compute the direct-cost rate and the indirect-cost rate per professional labor-hour for 2017 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 Cheney & Partners use? Explain.
3. Cheney's 2017 audit of Pierre & Co. was budgeted to take 170 hours of professional labor time. The actual professional labor time spent on the audit was 185 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 job cost.

HomcInsert Page Layout Formulas Data Cheney & Partners 2 Budget for 2017 3 Professional labor compensation 4Audit support department costs 5 Professional labor-hours billed to clients16,000 l hours 720,000 7 Actual results for 2017 8 Audit support department costs 9 Professional labor-hours billed to clients15,500 hours $744,000 10 Actual professional labor cost rate53 per hour