Service industry, job costing, two direct and two indirect cost categories, law firm. Keating 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 2008 related to the two direct cost categories is as follows:
Budgeted information for 2008 relating to the two indirect cost categories is
1. Compute the 2008 budgeted direct cost rates for (a) professional partners and (b) professional associates.
2. Compute the 2008 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 Problem4 32?