Question : Answer the following questions using the information below: A local accounting : 1217184

Answer the following questions using the information below:

A local accounting firm employs 20 full-time professionals. The budgeted annual compensation per employee is $40,500. The average chargeable time is 500 hours per client annually. All professional labor costs are included in a single direct-cost category and are allocated to jobs on a per-hour basis.

Other costs are included in a single indirect-cost pool, allocated according to professional labor-hours. Budgeted indirect costs for the year are $787,500, and the firm expects to have 90 clients during the coming year.

6) What is the budgeted direct labor cost rate per hour?

A) $18.00 per hour

B) $17.50 per hour

C) $4.05 per hour

D) $2,000 per hour

7) What is the budgeted indirect-cost rate per hour?

A) $1,575.00 per hour

B) $78.75 per hour

C) $18.00 per hour

D) $17.50 per hour

8) If ten clients are lost and the workforce stays at 20 employees, then the direct labor cost rate per hour:

A) will remain the same as before

B) will increase

C) will decrease

D) is indeterminable

9) A company may choose to use budgeted rates to allocate direct labor accounts if direct labor costs are difficult to trace to jobs as they are completed.

10) In some variations of normal costing, organizations use budgeted rates to assign direct costs as well as indirect costs to jobs.

11) At the end of the year, the direct costs traced to jobs using the budgeted rates will equal actual direct costs.

12) Modern Electronics manufactures surround sound systems and applies manufacturing costs to production at a budgeted indirect-cost rate of $22 per direct-labor hour. The following data are obtained from the accounting records for August 20X9:

Direct materials$350,000

Direct labor  (7,000 hours @ $15/hour)$105,000

Indirect labor$ 15,000

Plant lease$ 75,000

Depreciation on plant and equipment$  40,000

Marketing expense$  20,000

Plant utilities$  15,000

Required:

a.What actual amount of manufacturing overhead cost was incurred during August 20X9?

b.What amount of manufacturing overhead was allocated to all jobs during August 20X9?

c.For August 20X9, was manufacturing overhead underallocated or overallocated?  Explain.

13) A local engineering firm is bidding on a design project for a new client.  The total budgeted direct-labor costs for the firm are $400,000.  The total budgeted indirect costs are $600,000.  It is estimated that there are 8,000 billable hours in total.

Required:

a.What is the budgeted direct-labor cost rate?

b.What is the budgeted indirect-cost rate assuming direct-labor cost is the allocation base?

c.What should be the engineering firm bid on the project if the direct labor hours are estimated

at 300 hours?

14) A local CPA employs ten full-time professionals. The budgeted compensation per employee is $50,000. The maximum billable hours for each client are 400. Clients always receive their full amount of time. All professional labor costs are included in a single direct-cost category and are traced to jobs on a per-hour basis. Any other costs are included in a single indirect-cost pool, allocated according to professional labor-hours. Budgeted indirect costs for the year are $200,000 and the firm had 20 clients.

Required:

a.What is the direct-labor-cost rate per hour?

b.What is the indirect-cost rate per hour?