This information relates to the next two questions.

Clearstream Data Consulting (CDC) is a firm which advises its clients on data analytics. It uses the job costing system where each consulting project is deemed to be a separate job.

The total costs incurred by CDC over the most recent period which has just passed is as follows [Cost object = each consulting project undertaken]:

Direct cost $700,000

Indirect cost $250,000

CDC allocates all its indirect costs to each project based on the direct cost (dollars) incurred by each project.

One of the consulting project that CDC undertook recently is Project 88 which incurred a direct cost of $100,000. Project 88 is one of the 10 projects undertaken by CDC over the same period.

1)

The amount of indirect cost allocated to Project 88 in the most recent period is closest to:

Group of answer choices

$31,250

$280,000

$35,700

$100,000

Insufficient information to determine the answer

2)

CDC then discovers that it has the ability and hence decides to trace more cost items to individual projects. Assume that CDC is able to do this (i.e., trace more cost items) without incurring any additional costs.

As a result, its total indirect cost over the most recent period decreases to $200,000 (from $250,000); and Project 88's direct cost increases to $108,000 (from $100,000).

Using direct cost (dollars) as the allocation base, the amount of indirect cost that is allocated to Project 88 in the most recent period after this change is closest to:

Group of answer choices

$49,800

$28,800

$31,000

$136,800

$25,000