An accounting firm provides tax consulting for estates and trusts. Their job costing system has a single direct cost category (professional labour) and a single indirect cost pool (research support). The indirect cost pool contains all the costs except direct personnel costs. All budgeted indirect costs are allocated to individual jobs using actual professional labour hours.
Required:
a. Discuss the reasons a consulting firm might use normal costing in its job system rather than actual costing.
b. What might be some ways for the firm to change from a one pool allocation concept?

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The Answer of An accounting firm provides tax consulting for estates and trusts. Their job costing system has a single direct cost category (professional labour) and a single indirect cost pool (research support). The indirect cost pool contains all the costs except direct personnel costs. All budgeted indirect costs are allocated to individual jobs using actual professional labour hours.
Required:
a. Discuss the reasons a consulting firm might use normal costing in its job system rather than actual costing.
b. What might be some ways for the firm to change from a one pool allocation concept?

An Accounting Firm Provides Tax Consulting for Estates and Trusts