ECSR Solutions is a large technology consulting firm providing web design and social-media presence services to...

Transcribed Image Text:

ECSR Solutions is a large technology consulting firm providing web design and social-media presence services to small and medium businesses. In 2020, ECSR finished over one thousand projects for approximately 300 clients. ECSR uses normal absorption costing to estimate margins earned on each project; all indirect costs are allocated to engagements using knowledge-worker compensation as the allocation base (indirect-cost allocation rate is rounded to the nearest percent). Budgeted and actual revenues and expenses for 2020 are below: Revenues Direct costs: Knowledge-worker compensation Other direct Budgeted Actual $331,400,000 $363,673,000 $218,700,000 $249,988,000 $56,100,000 $57,658,000 $23,200,000 $24,929,000 Indirect costs: Support staff and management compensation Office space, equipment, energy Other indirect $7,100,000 $8,900,000 $6,087,000 $9,314,000 The largest project in 2020 involved a complete re-design of web user interface and database analytics for a maker and seller of high-end exercise equipment. This project was started in March 2020 and completed in August 2020. The client paid us $2,193,000 for this project (this was the amount we proposed when bidding on the project in January 2020). In January 2020, we estimated direct costs of the project at $1,557,000 (consisting of knowledge-worker compensation of $1,327,000 and other direct expenses of $250,000). Because of COVID-19 pandemic disruptions, the project took longer to complete than expected; this resulted in cost over-runs: project actual direct knowledge-worker compensation was $1,526,000, and project direct expenses were $255,000. The margin on this project from ECSR's normal absorption costing system is closest to: ECSR Solutions is a large technology consulting firm providing web design and social-media presence services to small and medium businesses. In 2020, ECSR finished over one thousand projects for approximately 300 clients. ECSR uses normal absorption costing to estimate margins earned on each project; all indirect costs are allocated to engagements using knowledge-worker compensation as the allocation base (indirect-cost allocation rate is rounded to the nearest percent). Budgeted and actual revenues and expenses for 2020 are below: Revenues Direct costs: Knowledge-worker compensation Other direct Budgeted Actual $331,400,000 $363,673,000 $218,700,000 $249,988,000 $56,100,000 $57,658,000 $23,200,000 $24,929,000 Indirect costs: Support staff and management compensation Office space, equipment, energy Other indirect $7,100,000 $8,900,000 $6,087,000 $9,314,000 The largest project in 2020 involved a complete re-design of web user interface and database analytics for a maker and seller of high-end exercise equipment. This project was started in March 2020 and completed in August 2020. The client paid us $2,193,000 for this project (this was the amount we proposed when bidding on the project in January 2020). In January 2020, we estimated direct costs of the project at $1,557,000 (consisting of knowledge-worker compensation of $1,327,000 and other direct expenses of $250,000). Because of COVID-19 pandemic disruptions, the project took longer to complete than expected; this resulted in cost over-runs: project actual direct knowledge-worker compensation was $1,526,000, and project direct expenses were $255,000. The margin on this project from ECSR's normal absorption costing system is closest to: