Job order costing
Not what you're looking for?
I am having difficulty with the following problem. I have tried this problem on my own, but I having trouble identifying the traceable costs and the cost driver used. It is broken up into 4 parts.
Question:
KLP provides consulting services and uses a job-order system to accumulate the cost of client projects. Traceable costs are charged directly to individual clients; in contrast, other costs incurred by KLP, but not identifiable with specific clients, are chraged to jobs using a predetermined overhead application rate. Clients are billed for directly chargeable costs, overhead, and a markup.
KLP anticipateds the following costs for the upcoming year:
PERCENTAGE OF COST
DIRECTLY TRACEABLE
TO CLIENTS
COST
Professional staff salaries $5,000,000 80%
Administrative support staff 600,000 50
Travel 200,000 80
Other Operating costs 200,000 20
KLP'S partners desire to make a $480,000 profit for the firm and plan to add a percentage markup on cost to achieve that figure.
On May 14, KLP completed work on a project for Lawson Manufacturing. The following costs were incurred: professional salaries, $68,000; administrative support staff, $8,900; travel, $10,500; and other operating costs, $2,600.
Required:
A) Determine KLP'S total traceable costs for the upcoming year and the firms total anticipated overhead.
B) Calculate the predetermined overhead rate. The rate is based on total costs traceable to client jobs.
C) What percentage of cost will KLP add to each job to achieve its profit target?
D) Determine the total cost of the Lawson Manufacturing project. How much would Lawson be billed for services performed?
Purchase this Solution
Solution Summary
The solution explains the calculations under job order costing
Solution Preview
A) Determine KLP'S total traceable costs for the upcoming year and the firms total anticipated overhead.
The traceable costs are those which are directly traceable to clients. The traceable costs are
80% of professional staff salaries = 5,000,0000X80%=4,000,000
50% of administrative support staff = 600,000X50% = 300,000
80% of Travel = 200,000X80% = 160,000
20% of Other operating cost = 200,000X20%=40,000
Total ...
Purchase this Solution
Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.