Problem
Job costing with multiple direct-cost categories, single indirect-cost pool, law firm (continuation of 5-29). (LO 4) Hanley asks his assistant to collect details on those costs included in the $21,000 indirect-cost pool that can be traced to each individual case. After further analysis, Marc and Associates is able to reclassify $14,000 of the $21,000 as direct costs:
The table is as follows.
|
Other Direct Costs
|
Widnes Coal
|
Saint Helen's Glass
|
|
Research support labour
|
$1,600
|
$ 3,400
|
|
Computer time
|
500
|
1,300
|
|
Travel and allowances
|
600
|
4,400
|
|
Telephones and faxes
|
200
|
1,000
|
|
Photocopying
|
250
|
750
|
|
Total
|
$3,150
|
$10,850
|
Hanley decides to calculate the costs of each case had Marc and Associates used six direct-cost pools and a single indirect-cost pool. The single indirect-cost pool would have $7,000 of costs and would be allocated to each case using the professional labour-hours base.
Task
A. What is the revised indirect cost-allocation rate per professional labour-hour for Marc and Associates when total indirect costs are $7,000?
B. Compute the costs of the Widnes and St. Helen's cases if Marc and Associates had used its refined costing system with multiple direct-cost categories and one indirect-cost pool.