David & Cooper, a consulting firm, specializes in providing internal audit services for its clients. It bills the clients $156 per hour for its professional services; it costs the firm $81 per hour to cover the cost of its staff. To cover its MOH costs, the partners have always applied MOH costs to clients based on total direct labor hours. At the beginning of the year, they budgeted for 8,100 direct labor hours and $150,660 of MOH costs. In the current year, the firm’s professional staff worked on three key client projects: All Ways, Inc., for 2,600 hours; My Way, Inc., for 2,100 hours; and High Way, Inc., for 4,300 hours. These clients were billed for this work by the end of the year. Naturally, there were other costs incurred to run the firm, including sales and marketing costs, which added up to $126,000 this year. Actual MOH costs for the year totaled $136,000. Prepare an income statement for the firm for the current year.

Ambassador Suites Inc., operates a downtown hotel property that has 300 rooms. On average, 80% of Ambassador Suites's rooms are occupied on weekdays, and 40% are occupied during the weekend. The manager has asked you to develop a direct labor budget for the housekeeping and restaurant staff for weekdays and weekends. You have determined that the housekeeping staff requires 40 minutes to clean each occupied room. The housekeeping staff is paid $10 per hour. The restaurant has 6 full-time staff (eight-hour day) on duty, regardless of occupancy. However, for every 20 occupied rooms, an additional person is brought in to work in the restaurant for the eight-hour day. The restaurant staff is paid $8 per hour. Determine the estimated housekeeping, restaurant, and total direct labor cost for an average weekday and average weekend day. Enter percentages as whole numbers. Ambassador Suites Inc. Direct Labor Cost Budget For a Weekday or a Weekend Day Weekday Weekend Day Room occupancy Room…

Banc Corporation Trust is considering either a bank-wide overhead rate or department overhead rates to allocate $398,000 of indirect costs. The bank-wide rate could be based on either direct labor-hours (DLH) or the number of loans processed. The departmental rates would be based on direct labor-hours for Consumer Loans and a dual rate based on direct labor-hours and the number of loans processed for Commercial Loans. The following information was gathered for the upcoming period: Department Consumer Commercial Multiple Choice O How much of the $398,000 indirect costs should be allocated to the Consumer Department, if Banc Corporation Trust uses a bank-wide rate based on the number of loans processed? Note: Round the bank-wide rate to the nearest dollar. O O $298,000 $298.500 $290,000 DLH 18,000 6,000 $108,000 Loans Processed 750 250 Direct Costs $ 290,000 $ 170,000

In October, Temptations Event Planners (TEP) planned events for two clients. TEP worked 140 hours for Ward Corporation and 240 hours for Girardin Industries. TEP bills clients at the rate of $350 per hour; labor cost for its planning staff is $140 per hour. The total number of hours worked in October was 380, and overhead costs were $15,600. Overhead is applied to clients at $32 per planner- hour. In addition, TEP had $27,000 in marketing and administrative costs. All transactions are on account. All services were billed. Transaction (a) (b) (c) (d) Description Record labor cost Record applied service overhead Record cost of services billed Record actual service overhead Required: a. Show labor and overhead cost flows through T-accounts. b. Prepare an income statement for the company for October.

Allocation Busters (AB) is a dispute mediation firm offering services to firms in disputes about cost allocations with government agencies. For March, AB worked 453 hours for Massive Airframes and 679 hours for Gigantic Drydocks. AB bills clients at the rate of $512 per hour; labor cost for its professional staff is $200 per hour. Overhead costs in March totaled $40,090. Overhead is applied to clients at $42 per labor-hour. In addition, AB had $198,700 in marketing and administrative costs. All transactions are on account. All services were billed.   Transaction Description (a) Record Labor cost (b) Record Applied Service Overhead (c) Record Cost of services billed (d) Record Actual Service Overhead   Required: a. Show labor and overhead cost flows through T-accounts. b. Prepare an income statement for the company for March.

Sun Company, a subsidiary of Guardian, Inc., produces and sells three product lines. The company employs a standard cost accounting system for record keeping purposes. At the beginning of the current year, the president of Sun Company presented the budget to the parent company and accepted a commitment to contribute $15,800 to Guardian’s consolidated profit for the year. The president has been confident that the year’s profit would exceed the budget target, since the monthly sales reports that he has been receiving have shown that sales for the year will exceed budget by 10%. The president is both disturbed and confused when the controller presents an adjusted forecast as of November 30 indicating that profit will be 11% under budget. The two forecasts are presented below: Sun Company Forecasts of Operating Results   1/1     11/30   Sales $268,000   $294,800 Cost of goods sold at standard* 212,000     233,200   Gross margin at…

Winken, Blinken, and Nod is a law firm specializing in real estate litigation. In addition to the three partners, the firm employs nine associates who work directly with clients. The average budgeted compensation for the twelve professionals is $299,040. Each lawyer is budgeted at 1,680 billable hours per year. All professional labor costs are included in a single direct cost pool and are traced to jobs on a per-hour basis. All non-professional labor costs are included in a single overhead cost pool and are allocated to jobs using professional labor hours as the allocation base. Budgeted overhead costs total $2,016,000. The firm is considering bidding on some work with a local university. The job is expected to require 190 hours of professional labor. Required: a. Compute the budgeted direct cost rate per hour of professional labor. b. Compute the budgeted (that is, predetermined) overhead cost rate per hour of professional labor. c. Compute the budgeted cost for the university job.…

Crable and Tesch, partners in a systems consulting firm, budgeted the following professional labor hours for the year ended December 31, 2016: Partners 4,000 Associates 14,000 Staff. 22,000 Partners have a billing rate of $225 per hour and actually earn $110 per hour. Associates bill out at $140 per hour and earn $85 per hour. Staff bill out at a rate of $75 per hour and earn $35 per hour. REQUIRED: 1. Prepare a revenue budget. 2. Prepare a professional labor budget.

The Theater Arts Guild of Dallas (TAG-D) employs 5 people in its Publication Department. These people lay out pages for pamphlets, brochures, magazines, and other publications for the TAG-D productions. The pages are delivered to an outside company for printing. The company is considering an outside publication service for the layout work. The outside service is quoting a price of $21 per layout page. The budget for the Publication Department for the current year is as follows: Salaries $332,600 Benefits 75,600 Supplies 40,300 Office expenses 50,400 Office depreciation 45,400 Computer depreciation 30,200 Total $574,500 The department expects to lay out 24,000 pages for the current year. The Publication Department office space and equipment would be used for future administrative needs, if the department's function were purchased from the outside. a.  Prepare a differential analysis dated February 22 to determine whether TAG-D should Lay Out Pages Internally…

Biotechtron, Inc., has two research laboratories in the Southwest, one in Yuma, Arizona, and theother in Bernalillo, New Mexico. The owner of Biotechtron centralized the legal services functionin the Yuma office and had both laboratories send any legal questions or issues to the Yuma office. The legal services support center has budgeted fixed costs of $160,000 per year and a budg-eted variable rate of $65 per hour of professional time. The normal usage of the legal services cen-ter is 2,600 hours per year for the Yuma office and 1,400 hours per year for the Bernalillo office. This corresponds to the expected usage for the coming year.Required:1. Determine the amount of legal services support center costs that should be assigned to eachoffice. 2. Since the offices produce services, not tangible products, what purpose is served by allocat-ing the budgeted costs? 3. Now, assume that during the year, the legal services center incurred actual fixed costs of$163,000 and actual variable…