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Joleen Harmon, CPA, has two clients and uses a job order cost system




Question;1.Joleen Harmon, CPA, has two clients and uses a job order cost system. Client A requires 20 hours of partner time and 100 hours of staff time. Client B will use 12 hours of partner time and 75 hours of staff time. Partners are paid $85 an hour and billsupport time at 50% of their hourly rate. Staff are paid $25 an hour and bill support time at $20 per billable hour. What is the total charge to each of these clients if profit is added at 20% over cost? 2.Kelley and Wright, Attorneys, have the following budgeteditems for the month of May: Fringe benefits $9,200 Depreciation?equipment 5,000 Utilities 2,000 Professional salaries (from budget) 20,000 Travel 2,400 Revenues (from budget) 68,000 Lease expense 6,700 Secretarial support 5,600 Professional dues and subscriptions3,800 Prepare a budgeted income statement for the month of May. 3.Walters and Witt, a law firm, is analyzing the profitability of its cases. During the year, the firm represented the Umberg Company in numerous routine legal issues, for which it charged a monthlyretainer fee of $2,500. Budget information for the firm follows: Professional labor: Partners $500,000 Associates 900,000 Paralegals 600,000 Total $2,000,000 Overhead: Secretarial salaries $900,000 Depreciation of office equipment 300,000 Fringe benefits 400,000Lease expense 200,000 Utilities 300,000 Communication expenses 250,000 Office supplies 150,000 Total $2,500,000 Partner, associate, and paralegal hourly salary rates are $100, $60, and $20, respectively. Actual time spent for the Umberg cases follows: ActualPartners 23 hours Associates 42 hours Paralegals 72 hours Walters and Witt uses activity-based costing to determine the cost of its cases. With a consultant?s help, the firm has developed the following information about cost pools: Cost Pool Expenses IncludedCost Allocation Base Secretarial support Secretarial salaries Partner labor hours Fringe benefits Fringe benefits Professional labor dollars Office support Depreciation, lease, utilities, communications, and supplies Professional labor hours a. Compute thebudgeted rate per unit of cost driver for each cost pool. b. Using activity-based costing, compute the cost of the Umberg work this year 4.Dye and Dye, Attorneys-at-Law, each bill 1,500 hours per year and receive pay of $100,000 each. Four paralegals workfor the firm and each receives pay of $40,000 and works 2,000 hours per year. Overhead of $396,000 is anticipated, $300,000 is attorney support, and the rest is paralegal support. Determine overhead under each of the following circumstances: a. A simplifiedcost approach is used based on hours. b. A simplified cost approach is used based on payroll dollars. c. An activity-based costing approach is used. Attorney support is based on labor costs, and paralegal support is based on hours worked 5.The Tijama ManufacturingCompany has determined the cost of manufacturing a unit of product to be as follows, based on normal production of 50,000 units per year: Direct materials $20.00 Direct labor 15.00 Variable factory overhead 10.00 $45.00 Fixed factory overhead 12.00 $57.00Operating statistics for the month of August and September include August September Units produced 4,200 4,000 Units sold 3,500 4,200 Selling and administrative expenses $25,000 $35,000 The selling price is $70 per unit. There were no inventories on August1, and there is no work in process at September 30. Prepare comparative income statements for each month under the following methods: a. Absorption costing method b. Direct costing method6 Tress Enterprises manufactures shampoo and conditioner.Last year Tress sold 120,000 bottles of product. Unit sales ofconditioner amounted to 60% of the number of units of shampoo.This trend is expected to continue The selling price for bothproducts is $12.00, however, the variable cost of a unit ofshampoo is $6.00 while the variable cost of unit of conditioner is 8.00 dollars, fixed costs are expected to be $42,000.a.Compute the number of each product soldb.Compute the weighted-average contribution margin per unitc.Compute the overall break-even point in unitsd.Compute the unit sales of shampoo and conditioner at thebreak-even point.e.Compute the dollar sales of shampoo and conditioner at thebreak-even point7.Hoctor Industries wishes to determine the profitability of itsproducts and asks the cost accountant to make a comparative analysis of sales, cost of sales, and distribution costs of eachproduct for the year. The accountant gathers the following information, which will be useful in preparing the analysis:Standard DeluxeNumber of units sold 500,000 350,000Number of orders received 15,000 4,000Selling price per unit $10 $20Cost per unit $ 4 $12Advertising expenses total $100,000, with 60% being expendedto advertise the Deluxe model.The representatives commission are 5% and 7% for the standard and delux models respectively. The sales manager's salary of $50,000 is allocated evenly between products. Other miscellaneous sellings costs are estimated to be $6 per order received.a. Compute the selling cost per unit.b. Prepare an analysis for Hoctor Industries that shows incomparative form the income derived from the sale of eachunit for the year.


Paper#51964 | Written in 18-Jul-2015

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