Question

2 Kahn & Associates is a low firm sp i n d l ated work employs 25 professionals partners and 18 associates) who work direct with clients Them e budete total compensation per professional or 2017 is $110.000. Each professionalisbudpated to havn 2000 hab hours to clients in 2017. All professionals work for Clients to their maximum 2.000 billable hours available. All professional labor costs are included in a single direct-cost category and are traced to jobs on a per hour basis All costs of Kahn & Associates other than professional labor costs are included in a single indirect-cost pool (legal support and are allocated to jobs using professional labor-hours as the allocation base. The budgeted level of indirect costs in 2017 is $2,250,000 Read the requirements! Requirement 1. Identify the components of the overview diagram of Kahn's job-costing system. E (5) H (8) (9) Requirement 2. Compute the 2017 budgeted direct-cost rate per hour of professional labor. Select the formula to compute the budgeted direct cost rate, then enter the amounts and calculate the rate Budgeted direct- (10) = cost rate per hour per hour (11) Requirement 3. Compute the 2017 budgeted indirect-cost rate per hour of professional labor. Select the formula to compute the budgeted indirect-cost rate, then enter the amounts and calculate the rate. Budgeted indirect (12) 1 (13) = cost rate per hour per hour Requirement 4. Prepare a cost estimate for the Richardson, Inc. job, which requires 110 budgeted hours of professional labor and for the Punch, Inc. job, which requires 150 budgeted hours of professional labor. Richardson Punch Direct-costs Indirect costs Total costs

Answer 1

1.
A - INDIRECT COST POOL
B - INDIRECT COSTS
C - COST ALLOCATION BASE
D - PROFESSIONAL LABOR HOURS
E - COST OBJECT : JOB FOR CLIENT
F - INDIRECT COSTS
G - PROFESSIONAL LABOR HOURS
H - DIRECT COSTS
I - PROFESSIONAL LABOR

2.
Budgeted direct cost per hour = Budgeted Compensation per professional / Budgeted Direct labor hours per professional
= $110000 / 2000 = $55 per hour

3.
Budgeted indirect cost per hour = Budgeted Indirect costs / Budgeted total Direct labor hours
= $2250000 / 50000 = $45 per hour

4.

	Richardson	Punch
Direct Costs	$            6,050	$            8,250
Indirect Costs	$            4,950	$            6,750
Total Costs	$         11,000	$         15,000