Job costing with multiple direct-cost categories, single indirect-cost pool, law firm (continuation of 5-30). Harrington asks his assistant to collect details on those costs included in the $25,000 indirect-cost pool that can be traced to each individual job. After analysis, Bradley is able to reclassify $15,000 of the $25,000 as direct costs:
Harrington decides to calculate the costs of each job as if Bradley had used six direct cost-pools and a single indirect-cost pool. The single indirect-cost pool would have $10,000 of costs and would be allocated to each case using the professional labor-hours base. 1. Calculate the revised indirect-cost allocation rate per professional labor-hour for Bradley Associates when total indirect costs are $10,000. 2. Compute the costs of the Campa and St. Edith’s jobs if Bradley Associates had used its refined costing system with multiple direct-cost categories and one indirect-cost pool. 3. Compare the costs of Campa and St. Edith’s jobs in requirement 2 with those in requirement 2 of Problem 5-30. Comment on the results.
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