Calculate the direct and indirect costs rate

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QUESTION - ABC & Associates is a public accounting firm that specialises in providing accounting and auditing sery Its job-costing system has one direct cost pool, professional labour and a single indirect cost pool t includes all supporting costs of running the office. The support costs are allocated to clients on the bash professional labour-hours. In addition to the two senior partners, ABC has six partners who work dire with clients. Each of the eight partners is expected to work for approximately 2 650 hours a year. Budge and actual costs for 2016 were:

Budgeted professional labour costs

$4,240,000

Budgeted support costs

$2,000,000

Actual professional labour costs

$4,893,000

Actual support costs

$2,400,000

Actual total professional hours

23,300 hours

Required: Calculate the direct and indirect costs rate per professional labour-hour under:

(a) Actual costing

(b) Normal costing

Reference no: EM131725805

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