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14) Fixed costs remain constant at $400,000 per month. During high-output months variable costs are $320,000,...

14) Fixed costs remain constant at $400,000 per month. During high-output months variable costs are $320,000, and during low-output months variable costs are $80,000. What are the respective high and low indirect-cost rates if budgeted professional labor-hours are 16,000 for high-output months and 4,000 for low-output months?

A) $45.00 per hour; $120.00 per hour

B) $45.00 per hour; $45.00 per hour

C) $25.00 per hour; $20.00 per hour

D) $56.20 per hour; $120.00 per hour

15) Tiscara Company manufactures insulation and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labor-hour. The following data are obtained from the accounting records for June 2014:

Direct materials $440,000

Direct labor (3,500 hours @ $11/hour) 38,500

Indirect labor 15,000

Plant facility rent 50,000

Depreciation on plant machinery and equipment 35,000

Sales commissions 10,000

Administrative expenses 25,000

The actual amount of manufacturing overhead costs incurred in June 2014 totals ________.

A) $278,500

B) $100,000

C) $80,000

D) $110,000

Answer the following questions using the information below:

Roiann and Dennett Law Office employs 12 full-time attorneys and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 2014:

Budget Actual

Indirect costs $270,000 $300,000

Annual salary of each attorney $100,000 $110,000

Annual salary of each paraprofessional $ 29,000 $ 30,000

Total professional labor-hours 50,000 dlh 60,000 dlh

16) What are the actual direct-cost rate and the actual indirect-cost rate, respectively, per professional labor-hour?

A) $27.00; $4.17

B) $29.80; $5.40

C) $32.40; $5.00

D) $27.00; $5.00

17) How much should the client be billed in an actual costing system if 200 professional labor-hours are used?

A) $5,000

B) $6,960

C) $7,480

D) $6,400

Expert Solution

14) Option A is correct.

High Variable indirect cost rate = 320000 / 16000 = $ 20 per labour hour + High Fixed indirect cost rate = 400000 / 16000 = $ 25

Total High indirect cost rate = 20 + 25 = $ 45 per labour hour

Low Variable indirect cost rate = 80000 / 4000 = $ 20 per labour hour +Low Fixed indirect cost rate = 400000 / 4000 = $ 100

Total Low indirect cost rate = 20 + 100 = $ 120 per labour hour

15) Option B is correct.

Manufacturing overhead costs incurred = Indirect labor + plant facility rent + Depreciation

= 15000+50000+35000

= $100,000

16) Option D si correct.

Calculation of actual direct-cost rate and actual indirect-cost rate:

Total direct costs = (12*110000(+(10*30000) = $1,620,000

Total professional labor hours = 60000 dlh

Actual direct -cost rate = Total direct cost/total professional labor hours

= 1620000/60000

= $27

Actual indirect-cost rate= Total indirect cost/total professional labor hours

= 300000/60000

=$5

17) Option D is correct.

Calculation of amount by which the client should be billed:

Amount by which client be billed= (27+5)*200 professional labor hours'

= 32*200

= $6,400

ekkarill92 answered 10 months ago

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