Calculate the current indirect cost allocation rate per professional hour. Calculate the total amount that would...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Calculate the current indirect cost allocation rate per professional hour. Calculate the total amount that would be billed to Larson given the current costing structure. Calculate the activity cost allocation rates that could be used to allocate operating overhead costs to client jobs. Calculate the amount that would be billed to Larson using ABC costing. Which type of billing system is more fair to clients? Explain. Data table All operating costs other than professional salaries (travel reimbursements, copy costs, secretarial salaries, office lease, and so forth) can be assigned to the three activities. Total activity costs, cost drivers, and total usage of those cost drivers are estimated as follows: Total Activity Activity Cost Cost Driver Transporation to clients $ 12,000 Round-trip mileage to clients Blueprint copying 35,000 Number of copies 210,000 Office support Secretarial time $ 257,000 Total operating overhead Total Usage by Corporate Clients . 3,000 miles 300 copies 2,300 secretarial hours Total Usage by Private Clients 12,000 miles 700 copies 2,700 secretarial hours Grenier & Company is an architectural firm specializing in home remodeling for private clients and new office buildings for corporate clients. Grenier charges customers at a billing rate equal to 136% of the client's total job cost. A client's total job cost is a combination of (1) professional time spent on the client ($69 per hour cost of employing each professional) and (2) operating overhead allocated to the client's job. Grenier allocates operating overhead to jobs based on professional hours spent on the job. Grenier estimates its five professionals will incur a total of 10,000 professional hours working on client jobs during the year. (Click the icon to view the operating cost information.) Anne Larson hired Grenier to design her kitchen remodeling. A total of 30 professional hours were incurred on this job. In addition, Larson's remodeling job required one of the professionals to travel back and forth to her house for a total of 150 miles. The blueprints had to be copied four times because Larson changed the plans several times. In addition, 18 hours of secretarial time were used lining up the subcontractors for the job. Read the requirements. Requirement 1. Calculate the current indirect cost allocation rate per professional hour. (Round your answer to the nearest cent.) The current indirect cost allocation rate per professional hour is $25.70 Requirement 2. Calculate the total amount that would be billed to Larson given the current costing structure. Determine the formula, then calculate the amount that would be billed to Larson given the current costing structure. (Round all amounts to the nearest cent.) Total cost of job × × Markup percentage = Amount billed to client = 3,863.76 Calculate the current indirect cost allocation rate per professional hour. Calculate the total amount that would be billed to Larson given the current costing structure. Calculate the activity cost allocation rates that could be used to allocate operating overhead costs to client jobs. Calculate the amount that would be billed to Larson using ABC costing. Which type of billing system is more fair to clients? Explain. Data table All operating costs other than professional salaries (travel reimbursements, copy costs, secretarial salaries, office lease, and so forth) can be assigned to the three activities. Total activity costs, cost drivers, and total usage of those cost drivers are estimated as follows: Total Activity Activity Cost Cost Driver Transporation to clients $ 12,000 Round-trip mileage to clients Blueprint copying 35,000 Number of copies 210,000 Office support Secretarial time $ 257,000 Total operating overhead Total Usage by Corporate Clients . 3,000 miles 300 copies 2,300 secretarial hours Total Usage by Private Clients 12,000 miles 700 copies 2,700 secretarial hours Grenier & Company is an architectural firm specializing in home remodeling for private clients and new office buildings for corporate clients. Grenier charges customers at a billing rate equal to 136% of the client's total job cost. A client's total job cost is a combination of (1) professional time spent on the client ($69 per hour cost of employing each professional) and (2) operating overhead allocated to the client's job. Grenier allocates operating overhead to jobs based on professional hours spent on the job. Grenier estimates its five professionals will incur a total of 10,000 professional hours working on client jobs during the year. (Click the icon to view the operating cost information.) Anne Larson hired Grenier to design her kitchen remodeling. A total of 30 professional hours were incurred on this job. In addition, Larson's remodeling job required one of the professionals to travel back and forth to her house for a total of 150 miles. The blueprints had to be copied four times because Larson changed the plans several times. In addition, 18 hours of secretarial time were used lining up the subcontractors for the job. Read the requirements. Requirement 1. Calculate the current indirect cost allocation rate per professional hour. (Round your answer to the nearest cent.) The current indirect cost allocation rate per professional hour is $25.70 Requirement 2. Calculate the total amount that would be billed to Larson given the current costing structure. Determine the formula, then calculate the amount that would be billed to Larson given the current costing structure. (Round all amounts to the nearest cent.) Total cost of job × × Markup percentage = Amount billed to client = 3,863.76
Expert Answer:
Related Book For
Posted Date:
Students also viewed these accounting questions
-
FinCorp Inc. is exploring different portfolio allocations between two stocks. Complete the following table. Case1 Case 2 Case 3 Case 4 Case 5 $ invested in stock 1 $ invested in stock 2 Total $...
-
Use the Extrapolation Algorithm with tolerance TOL = 106, hmax = 0.5, and hmin = 0.05 to approximate the solutions to the following initial-value problems. Compare the results to the actual values....
-
You must then research best practices for using your chosen technology in a business setting. LinkedIn Based on this selection, describe the medium and its uses. Then invent a business scenario in...
-
Report writing is very time-consuming. What should be added to a trending database to quickly interrogate vibration data yet yield a quality report?
-
1. Mr. Albert has a piece of property he has used in his business for 25 years. He is moving his business across the country and needs to get rid of the real estate he currently owns, as he won't be...
-
1: Provided in the template below are elements of Quality Areas 1 and 6 of the National Quality Standard (NQS). Access and review each of the Quality Areas in the ACECQA website, and for each of the...
-
The velocity distribution for fully developed laminar flow through a circular pipe is constant across the cross section. varies linearly from zero at walls to maximum at the center varies...
-
As a family law paralegal, you will likely be called upon by family, friends, and acquaintances to give some "simple" legal advice. How should you handle these situations? Is it UPL for you to show...
-
Define what it means to be resilient? Define stress? Describe 3 major sources of personal or professional stress? Describe 2 small action you can take to start to be able to better handle each of the...
-
What are the psychological underpinnings of social cohesion and collective identity, and how do factors such as intergroup conflict, prejudice, and social exclusion impact the fabric of society?
-
Explain the distinctions between the following and give an example of both: Domestic and international law Substantive and procedural law Public and civil law Tort law and Employment Law Estate law...
-
How do cultural values and norms evolve over time, and what factors contribute to the emergence of new cultural paradigms or the persistence of traditional belief systems within diverse societies?
-
List the major elements (or features) which are present in all audits.
-
In Exercises 15 through 30, find the derivative dy/dx. In some of these problems, you may need to use implicit differentiation or logarithmic differentiation. y ex + et -2x 1 + e
-
What are the three components of a typical company's approach to ethics and social responsibility?
-
Why do companies need to do more than just earn a profit?
-
Warren Buffett is a world-famous investor and CEO of conglomerate Berkshire Hathaway, which includes companies as diverse as Kraft Heinz, Geico Auto Insurance, and Benjamin Moore Paints. Buffett...
Study smarter with the SolutionInn App