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Jillian Architecture Company does custom architectural designs for individuals and corporations. The company employs two assistants, who are paid $30 per hour. Clients are billed $100 per hour for the work of the assistants and $150 per hour for Jillian's design services. During the month of July, the assistants spent a total of 300 hours on a Bank job and 200 hours on a custom designed house job. Jillian worked 200 hours, spending 75% of her time on the Bank job and 25% on the house job. There were 100 labor hours that were not billable to clients. Overhead costs of $20,000 were incurred and assigned to clients on the basis of labor hours. Marketing and administrative costs were $35,000.
Compute the revenue and cost for each client.
Some firms have a lot of fixed costs and a few variable costs, while other firms are configured the other way around. What effect do you think the existence of a high proportion of fixed costs has on the desirability of using ABC methods?
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Illustrate out the benefits of activity-based costing. Write down the limitations of activity-based costing.
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What are the corresponding units for direct materials and conversion costs, correspondingly, for June?
Petty Petroleum, Inc. uses various chemicals to manufacture its products. Variance data for last month for three primary chemicals used in production are as follows (F indicates a favorable variance; U indicates an unfavorable variance):
Assume that for the second quarter in row, profits are down at Waterfall division. Division Management budgeted $250,000 in profits for the second quarter but actual results were only $197,000 in profits.
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