Question

Farris & Company is an architectural firm specializing in home remodeling for private clients and new office Abagal Lahired and to design her lachen remodeling A total of 25 professional hours were incurred on this buildings for corporate dients Farris charges customers at a biling rate equal to 1281 of the diens otaljob b . In addition Laws remodeling abrogured one of the professionals to travel back and forth to her house for a A dient cost is a combination of professional time spent on the client (567 per hour cost of employing total of 1 mes The blueprints had to be copied four times because low changed the plans several times in each professional and (2) operating overhead located to the cents job Farris allocates operating overhead to a d 19 hours of secretarial time were used lining up the subcontractors for the job jobs based on professional hours spent on the job Farris estimates its ve professionals will incur a tal of 10,000 professional hours working on client jobs during the year Read the (Cick the konto view the operating cost information) Requirement 1. Calculate the current indirect cost allocation rate per professional hour (Round your answer to the nearest cent) The current indirect cost alocation rate per professional hour iss

Answer 1

1. The current indirect cost allocation rate per professional hour = $254000/10000 = $25.40

2.

Professional cost(25 x $67)	1675.00
Indirect cost (25 x $25.40)	635.00
Total job cost $	2310.00
Total amount billed (126% x $2310)	2910.60

Kindly round off as required since no instructions provided with the question regarding rounding off.

3.

Activity	Total Activity Cost	Cost Driver Usage	Activity Cost Allocation Rate
Transportation to clients	9000	15000	0.60
Blueprint copying	35000	1000	35.00
Office support	210000	5000	42.00

4.

Professional cost(25 x $67)	1675.00
Indirect cost	1034.00
Total job cost $	2709.00
Total amount billed (126% x $2709)	3413.34

Kindly round off as required since no instructions provided with the question regarding rounding off.

Activity	Cost Driver Usage	Allocation Rate	Cost Allocated
Transportation to clients	160	0.60	96
Blueprint copying	4	35.00	140
Office support	19	42.00	798
Total cost allocated $			1034

5. The ABC costing method is more fair to clients since it charges each client for the amount of resources actually utilized.