Job costing with multiple direct cost categories, single indirect cost pool, law firm (continuation of 5 29). 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 job. After analysis, Wigan is able to reclassify $14,000 of the $21,000 as direct costs:
|
Other Direct Costs |
Widnes Coal |
St. Helen’s Glass |
|
Research support labor |
$1,600 |
$ 3,400 |
|
Computer time |
500 |
1,300 |
|
Travel and allowances |
600 |
4,400 |
|
Telephones/faxes |
200 |
1,000 |
|
Photocopying |
250 |
750 |
|
Total |
$3,150 |
$10,850 |
Hanley decides to calculate the costs of each job as if Wigan had 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 labor hours base.
1. What is the revised indirect cost allocation rate per professional labor hour for Wigan Associates when total indirect costs are $7,000?
2. Compute the costs of the Widnes and St. Helen’s jobs if Wigan Associates had used its refined costing system with multiple direct cost categories and one indirect cost pool.
3. Compare the costs of Widnes and St. Helen’s jobs in requirement 2 with those in requirement. Comment on the results.