Financial Planning Partners Inc., employs 12 full-time CPAs 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 2018:

When using a normal costing system, year-end accounting records will show that indirect costs are ________.

Question

Financial Planning Partners Inc., employs 12 full-time CPAs 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 2018:

When using a normal costing system, year-end accounting records will show that indirect costs are ________.

Quizplus · Accepted Answer

Overallocated; allocated is $336,000 ($300,000 / 50,000 × 56,000 dlh), when actual is only $309,000.