Kidman has just completed a review of its job-costing system. This review included a detailed analysis of how past jobs used the firm’s resources and interviews with personnel about what factors drive the level of indirect costs. Management concluded that a system with two direct-cost categories (professional partner labor and professional associate labor) and two indirect-cost categories (general support and secretarial support) would yield more accurate job costs. Budgeted information for 2020 related to the two direct-cost categories is as follows:

Required

1. Compute the 2020 budgeted direct-cost rates for 

(a) Professional partners and 

(b) Professional  associates.
2. Compute the 2020 budgeted indirect-cost rates for 

(a) General support and 

(b) Secretarial support.
3. Compute the budgeted costs for the Richardson and Punch jobs, given the following information:

4. Comment on the results in requirement 

3. Why are the job costs different from those computed in Problem 4-37?
5. Would you recommend Kidman & Associates use the job-costing system in Problem 4-37 or the jobcosting system in this problem? Explain.

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Professional Partner Labor 5 1,500 per year $210,000 Total costs Cost-allocation base Number of professionals Hours of billable time per professional Total compensation (average per professional) Budgeted information for 2020 relating to the two indirect-cost categories is as follows: General Support Secretarial Support $2,025,000 $450,000 Partner labor-hours Professional Associate Labor 25 1,500 per year $75,000 Professional labor-hours