Assignment:
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.
Question 1: 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
Question 2: 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
Question 3: 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:
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PRE-OP costs
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OR costs
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In-Room costs
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Patient medicine:
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$100
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$250
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Direct Nursing time:
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$2,400
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$3,500
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Question 4: 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:
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Department One
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Department Two
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Direct materials purchased on account
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$44,000
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$71,000
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Direct materials used
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$13,000
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$5,400
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Direct manufacturing labor
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$21,000
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$21,400
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Indirect manufacturing labor
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$4,400
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$3,600
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Indirect materials used
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$3,000
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$1,900
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Lease on equipment
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$6,500
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$1,500
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Utilities
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$400
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$500
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Question 5: 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
Question 6: 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.
Question 7: 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.