Cheney & Partners, a Quebecbased public accounting partnership, specializes in

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:

Cheney & Partners, a Quebecbased public accounting partnership, specializes in

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.

Members

  • Access to 2 Million+ Textbook solutions
  • Ask any question from 24/7 available
    Tutors
$9.99
VIEW SOLUTION

OR

Non-Members

Get help from Cost Accounting Tutors
Ask questions directly from Qualified Online Cost Accounting Tutors .
Best for online homework assistance.