QUESTION 3

Henderson & Sons is a local accounting entity employing six accountants, four tax consultants and six administrative staff. The entity has a costing system that assigns costs to clients. There are two divisions ? accounting support and tax consulting. The entity uses a different indirect cost rate for each division. The following information was taken from the budget for the coming year.

Planned accountant hours Planned tax consultant hours Number of clients Accounting supplies Accounting support division 3 000 300 $ 15 000 Tax consulting division 12 000 5 000 1 000 $ 30 000 Salaries - accountants and tax consultants $150 000 $700 000 Indirect costs $100 000 $400 000