Hicks and Greene,a CPA firm that uses job order costing,is analyzing the profitability of its audits.During the year,the firm audited the Esterline Company,for which it charged $20,000.Budget information for the firm follows: Partner,associates and paralegal hourly salary rates are $100,$60 and $20,respectively.
Budgeted and actual time for the Esterline audit follows: In addition,the firm incurred $2,320 in travel costs related to Esterline,but the firm had budgeted for $2,500 of direct costs.
(a)Assuming that Hicks and Greene allocates overhead to jobs using direct labor cost as the cost driver,compute the predetermined overhead rate.
(b)Compute the cost of the Esterline audit.
(c)Prepare a cost performance report for the Esterline audit.
(d)Compute the profit that Hicks and Greene had on the Esterline audit.

Question

Hicks and Greene,a CPA firm that uses job order costing,is analyzing the profitability of its audits.During the year,the firm audited the Esterline Company,for which it charged $20,000.Budget information for the firm follows:  Partner,associates and paralegal hourly salary rates are $100,$60 and $20,respectively.
Budgeted and actual time for the Esterline audit follows:  In addition,the firm incurred $2,320 in travel costs related to Esterline,but the firm had budgeted for $2,500 of direct costs.
(a)Assuming that Hicks and Greene allocates overhead to jobs using direct labor cost as the cost driver,compute the predetermined overhead rate.
(b)Compute the cost of the Esterline audit.
(c)Prepare a cost performance report for the Esterline audit.
(d)Compute the profit that Hicks and Greene had on the Esterline audit.

Quizplus · Accepted Answer

The Answer of Hicks and Greene,a CPA firm that uses job order costing,is analyzing the profitability of its audits.During the year,the firm audited the Esterline Company,for which it charged $20,000.Budget information for the firm follows:  Partner,associates and paralegal hourly salary rates are $100,$60 and $20,respectively.
Budgeted and actual time for the Esterline audit follows:  In addition,the firm incurred $2,320 in travel costs related to Esterline,but the firm had budgeted for $2,500 of direct costs.
(a)Assuming that Hicks and Greene allocates overhead to jobs using direct labor cost as the cost driver,compute the predetermined overhead rate.
(b)Compute the cost of the Esterline audit.
(c)Prepare a cost performance report for the Esterline audit.
(d)Compute the profit that Hicks and Greene had on the Esterline audit.

Hicks and Greene,a CPA Firm That Uses Job Order Costing,is