Peyton asks her assistant to collect details on those costs included in the $500,000 indirect-cost pool that can be traced to each individual job. After analysis, Wharton is able to reclassify $300,000 of the $500,000 as direct costs:

Peyton decides to calculate the costs of each job as if Wharton had used six direct-cost pools and a single indirect-cost pool. The single indirect-cost pool would have $200,000 of costs and would be allocated to each case using the professional labor-hours base.
Required
1. Calculate the revised indirect-cost allocation rate per professional labor-hour for Wharton Associates when total indirect costs are $200,000.
2. Compute the costs of the Steger Enterprises and Bluestone Inc. jobs if Wharton Associates had used its refined costing system with multiple direct-cost categories and one indirect-cost pool.
3. Compare the costs of Steger Enterprises and Bluestone Inc. jobs in requirement 2 with those in requirement 2 of Problem 5-31. Comment on the results.

Transcribed Image Text:

Other Direct Costs Research support labor Computer time Travel and allowances Telephones/faxes Photocopying Total Steger Enterprises $36,000 8,000 14,000 5,000 6,000 $69,000 Bluestone Inc. S 77,000 32,000 84,000 24,000 14,000 S231,000