Homework Clinic
Social Science Clinic => Accounting => Topic started by: jho37 on Jul 5, 2018
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Venus Corp employs ten full-time professionals. The budgeted compensation per employee is 50,000. The maximum billable hours for each client are 500. Clients always receive their full amount of time.
All professional labor costs are included in a single direct-cost category and are traced to jobs on a per-hour basis. Any other costs are included in a single indirect-cost pool, allocated according to professional labor-hours. Budgeted indirect costs for the year are 250,000 and the firm had 30 clients.
Required:
a. What is the direct-labor-cost rate per hour?
b. What is the indirect-cost rate per hour?
c. What is the total cost incurred to the employer per hour?
d. How will the total cost be affected if the firm loses out on 5 clients?
Question 2
Product life-cycle management (PLM) software manages product data from design through manufacture, and disposal.
Indicate whether the statement is true or false
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Answer to Question 1
Answer:
a. Total direct cost = 50,000 10 = 500,000
Total hours = 500 30 = 15,000
Direct-cost rate per unit = 500,000/15,000 = 33.33 per hour
b. Indirect-cost rate per unit = 250,000/15,000 = 16.67 per hour
c. Total cost = 33.33 + 16.67 = 50.00
d. Total direct cost =500,000
Total hours = 500 25 = 12,500
Direct-cost per unit = 500,000/12,500 = 40.00 per hour
Indirect-cost per unit = 250,000/12,500 = 20 per hour
Total cost =40.00 + 20.00 = 60.00. Thus we notice a (60 50) = 10 increase in overall cost.
Answer to Question 2
T