Court and Kneigh is a public accounting entity that offers auditing and tax services to local small
Question:
The analysis has revealed that travel costs can now be considered a direct cost to the audit and tax services. Travel requisitions are to be used as the source documentation to trace the costs. The only other direct costs are professional labour costs, and these are shown in the table.
Required:
a. Using the current approach to cost allocation, compute the total indirect cost assigned to each service.
b. Using the activity approach to cost allocation, compute the activity cost rates.
c. Assign the indirect costs to each service, using the activity cost rates calculated in b. above.
d. Calculate the total cost for both audit and tax services under each cost allocation method.
e. Write a report to the partners advising which cost allocation method you would recommend.
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Related Book For
Accounting Business Reporting For Decision Making
ISBN: 9780730302414
4th Edition
Authors: Jacqueline Birt, Keryn Chalmers, Albie Brooks, Suzanne Byrne, Judy Oliver
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