This problem continues the Draper Consulting, Inc., situation from Problem 17-35 of Chapter 17. Recall that Draper

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This problem continues the Draper Consulting, Inc., situation from Problem 17-35 of Chapter 17. Recall that Draper allocated indirect costs to jobs based on a predetermined indirect cost allocation rate, computed as a percentage of direct labor costs. Because Draper provides a service, there are no direct materials costs. Draper is now considering using an ABC system. Information about ABC costs follows:

Budgeted Cost Cost Allocation Rate Allocation Base Number of designs Direct labor hours Number of tests of Activity 350,

Records for two clients appear here:

This problem continues the Draper Consulting, situation 17-35

Requirements
1. Compute the total cost of each job.
2. Is the job cost greater or less than that computed in Problem 17-35 for each job? Why?
3. If Draper wants to earn gross profit equal to 25% of cost, how much (what fee) should it charge each of these twoclients?

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Financial and Managerial Accounting

ISBN: 978-0132497978

3rd Edition

Authors: Horngren, Harrison, Oliver

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Question Posted: Dec 15, 2011 10:36 AM

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This problem continues the Draper Consulting, Inc., situation from Problem 17-35 of Chapter 17. Recall that Draper

Question:

Budgeted Cost Cost Allocation Rate Allocation Base Number of designs Direct labor hours Number of tests of Activity 350,000 Activity Design 7,000 110 Programming Testing 550,000 288,000 3,500

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Req 1 Draper Consulting Inc ABC Costing System Estimated Cost of Tommys Trains and Marcias Cookies J...View the full answer

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