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    Overheads, Job Costing, Budgets

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    Hassel and Carpenter Law Office employs six full-time attorneys and five paraprofessionals.
    Budgeted salaries include $75,000 for each attorney and $20,000 per paraprofessional.
    For 1999, indirect costs were budgeted at $125,000, but actually amounted to $150,000.
    Actual salaries were $80,000 for each attorney and $22,500 for each paraprofessional.

    Direct and indirect costs are applied on a professional, labor-hour basis, which include both
    attorney and paraprofessional hours. Total budgeted labor hours were 25,000; however,
    actual labor hours were 30,000.

    What is the actual direct-cost rate and the actual indirect-cost rate, respectively, if a client
    used 5,000 professional labor hours?
    a. $13.00; $7.50
    b. $13.00; $5.00
    c. $12.03; $5.00
    d. $11.75; $5.00

    How much should the client be billed in a normal costing system when 1,000 professional
    labor hours were used?
    a. $20,025
    b. $18,000
    c. $16,750
    d. $13,625

    How much should the client be billed in an actual costing system if 200 professional labor
    hours were used?
    a. $6,425
    b. $5,250
    c. $4,200
    d. $3,350

    ABC Hospital uses a job cost system for all patients who have surgery. In January, the pre-
    operating room (PRE-OP) and operating room (OR) had budgeted allocation bases of 2,000
    nursing hours and 1,000 nursing hours, respectively. The budgeted nursing overhead charges
    for each department for the month were $84,000 and $66,000, respectively. The hospital
    floor for surgery patients had budgeted overhead costs of $600,000 and 7,500 nursing hours
    for the month. For patient Bill Dole, actual hours incurred were eight and four hours,
    respectively, in the PRE-OP and OR. He was in the hospital for four days (96 hours.) Other
    costs related to Dole were:
    PRE-OP costs OR costs In-Room costs
    Patient medicine: $100 $250 $1,200
    Direct Nursing time: $2,400 $3,500 $5,400

    The hospital uses a budgeted overhead rate for applying overhead to patient stays. What
    is the total cost of the stay of Bill Dole?
    a. $1,550
    b. $11,300
    c. $8,280
    d. $21,130

    Bill's Electronics manufactures computer mouses. In April, the two production departments
    had budgeted allocation bases of 5,000 machine hours in Department One and 2,500 direct
    manufacturing labor hours in Department Two. The budgeted manufacturing overheads for
    the month were $23,000 and $25,000. Respectively. For Job 100, the actual costs incurred
    in the two departments were as follows:
    Department One Department Two
    Direct materials purchased on account $44,000 $71,000
    Direct materials used $13,000 $5,400
    Direct manufacturing labor $21,000 $21,400
    Indirect manufacturing labor $4,400 $3,600
    Indirect materials used $3,000 $1,900
    Lease on equipment $6,500 $1,500
    Utilities $400 $500

    Job 100 incurred 500 machine hours in Department One and 150 manufacturing labor hours
    in Department Two. The company uses a budgeted departmental overhead rate for applying
    overhead to production. WHAT IS THE TOTAL COST OF JOB 100?
    a. $18,400
    b. $60,800
    c. $64,600
    d. $82,600

    The financial budget is that part of the master budget that comprises:
    a. The capital budget and the cash budget.
    b. The capital budget and the budgeted balance sheet.
    c. The capital budget, the cash budget, and the budgeted statement of cash flows.
    d. The cash budget, the budgeted statement of cash flows, and the retained earnings budget.

    The direct materials usage budget is based on:
    a. The units to be produced during a period.
    b. Budgeted sales dollars.
    c. The predetermined factory overhead rate.
    d. The amount of labor hours worked.

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    https://brainmass.com/business/statement-of-cash-flows/overheads-job-costing-budgets-5447

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    Solution Preview

    Answer is in the attached file
    Hassel and Carpenter Law Office employs six full-time attorneys and five paraprofessionals.
    Budgeted salaries include $75,000 for each attorney and $20,000 per paraprofessional.
    For 1999, indirect costs were budgeted at $125,000, but actually amounted to $150,000.
    Actual salaries were $80,000 for each attorney and $22,500 for each paraprofessional.

    Direct and indirect costs are applied on a professional, labor-hour basis, which include both
    attorney and paraprofessional hours. Total budgeted labor hours were 25,000; however,
    actual labor hours were 30,000.

    There appears to be some error in the data of the problem as the answer does not match any of the options
    However if 3 instead of 6 attorneys are taken then we get the answers

    What is the actual direct-cost rate and the actual indirect-cost rate, respectively, if a client
    used 5,000 professional labor hours?
    a. $13.00; $7.50
    b. $13.00; $5.00
    c. $12.03; $5.00
    d. $11.75; $5.00 Option d is correct

    Actual Direct cost rate=(3*80000+5*22500)/30000
    11.75
    Actual indirect cost rate=150000/30000
    5

    How much should the client be billed in a normal costing system when ...

    Solution Summary

    The solution provides answers and explanations for multiple choice questions on Overheads, Job Costing, Budgets.

    $2.19

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