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ACC 543 Week 2 Individual Assignment



ACC 543 Week 2 Individual Assignment Job costing, service sector Consider the following budgeted data for a client job of Bob Crachit’s accounting firm. The client wants a fixed price quotation. Direct professional labor $20,000 Direct support labor 10,000 Fringe benefits for direct labor 13,000 Photocopying 2,000 Telephone calls 2,000 Computer equipment 6,000 Overhead is allocated at the rate of 100% of direct labor cost. REQUIRED: A. Prepare a schedule of the budgeted total costs for the client. Show subtotals for total direct labor costs and total costs as a basis for markup. B. Assume that the partner’s policy is to quote a fixed fee at 10% above the total costs. What fee would be quoted? C. Explain why the listed estimates for costs might not be similar to the actual costs for the job. What factors could affect the accuracy of these estimates? List as many factors as you can. 6.55 Costs of workplace health and safety Britain’s Health and Safety Executive (HSE) is a national regulatory body overseeing workplace health and safety. In its 2007 performance report, HSE reported the following statistics: 241 workers were killed at work. 141,350 employees suffered serious injuries at work. 2 million people were suffering from an illness they believed was caused or made worse by their current or past work. 646,000 of these were new cases in the last 12 months. 36 million days were lost overall (1.5 days per worker), 30 million due to work-related ill health and 6 million due to workplace injury. £20 billion (approximately 2% of GDP) is the estimated annual cost to society of work-related accidents and ill health. 8.25 Step-down, direct, and reciprocal methods, accuracy of allocation (Appendix 8A) Software Plus Corporation produces flight and driving simulations and games for personal computers. The president has a complaint about the accounting for support department costs. He points to the following table describing the use of various support departments in the company and says, “According to this table, every department receives services from all the support departments. But I understand that only some of the support departments are bearing costs from the other support departments. Why is that?” 7.21 ABC, ABM (CMA) Applewood Electronics manufactures two large-screen television models, the Monarch, which has been produced for five years and sells for $900, and the Regal, a new model that sells for $1,140. Applewood’s CEO, Harry Hazelwood, suggested that the company should concentrate its marketing resources on the Regal model and begin to phase out the Monarch model. Applewood currently uses a traditional costing system. The following cost information has been used as a basis for pricing decisions over the past year. Per-Unit Data Monarch Regal Direct materials $208 $584 Direct labor hours 1.5 3.5 Machine hours 8.0 4.0 Units produced 22,000 4,000


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