# Hanley asks his assistant to collect details on those costs included in the \$21,000 indirect-cost pool that can be traced

## Question:

Hanley asks his assistant to collect details on those costs included in the \$21,000 indirect-cost pool that can be traced to each individual job. After analysis, Wigan is able to reclassify \$14,000 of the \$21,000 as direct costs:

Hanley decides to calculate the costs of each job as if Wigan had used six direct cost-pools and a single indirect-cost pool. The single indirect-cost pool would have \$7,000 of costs and would be allocated to each case using the professional labor-hours base.

Required
1. What is the revised indirect-cost allocation rate per professional labor-hour for Wigan Associates when total indirect costs are \$7,000?
2. Compute the costs of the Widnes and St. Helen’s jobs if Wigan Associates had used its refined costing system with multiple direct-cost categories and one indirect-cost pool.
3. Compare the costs of Widnes and St. Helen’s jobs in requirement 2 with those in requirement 2 of Problem 5-29. Comment on the results.

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Related Book For

## Cost Accounting A Managerial Emphasis

ISBN: 978-0132109178

14th Edition

Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav

Question Details
Chapter # 5
Section: Questions
Problem: 30
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