Question: Kidman has just completed a review of
Kidman has just completed a review of its job-costing system. This review included a detailed analysis of how past jobs used the firm’s resources and interviews with personnel about what factors drive the level of indirect costs. Management concluded that a system with two direct-cost categories (professional partner labor and professional associate labor) and two indirect-cost categories (general support and secretarial support) would yield more accurate job costs. Budgeted information for 2020 related to the two direct-cost categories is as follows:
Budgeted information for 2020 relating to the two indirect-cost categories is as follows:
Required
1. Compute the 2020 budgeted direct-cost rates for
(a) professional partners and
(b) professional associates.
2. Compute the 2020 budgeted indirect-cost rates for
(a) general support and
(b) secretarial support.
3. Compute the budgeted costs for the Richardson and Punch jobs, given the following information:
4. Comment on the results in requirement 3. Why are the job costs different from those computed in Problem 4-37?
5. Would you recommend Kidman & Associates use the job-costing system in Problem 4-37 or the job- costing system in this problem? Explain.
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