PROBLEM 4-28_______________________________________________________________

Chirac & Partners is a Quebec-based public accounting partnership specializing in audit services.
Its job-costing system has a single direct-cost category (professional labor) and a single indirect-
cost pool (audit support, which contains all the costs in the Audit Support Department). Audit
support costs are allocated to individual jobs using actual professional labor-hours. Chirac &
Partners employs ten professionals who are involved in their auditing services.

Budgeted and actual amounts for 2004 are as follows:

Budget for 2004

Professional labor compensation $960,000
Audit Support Department costs $720,000
Professional labor-hours billed to clients 16,000 hours

Actual Results for 2004

Audit Support Department costs $744,000
Professional labor-hours billed to clients 15,500 hours
Actual professional labor cost rate $58 per hour

Required:

1. Compute the direct-cost rate per professional labor-hour and the indirect-cost rate per
professional labor-hour for 2004 under (a) actual costing, (b) normal costing, and (c) the
variation of normal costing that uses budgeted rates for direct costs.

2. The audit of the Montreal Expos, done in 2004, was budgeted to take 110 hours of
professional labor time. The actual professional labor time on the audit was 120 hours.
Compute the 2004 job cost using (a) actual costing, (b) normal costing, and (c) the variation
of normal costing that uses budgeted rates for direct costs. Explain any differences in the job
cost.

Instructions:

1. Review the printed template called Problem 4-28 that follows these instructions. In some
problems, some of the problem data have been entered for you in the data input section of the
spreadsheet.

2. There are 12 FORMULAS in the template that you need to provide to complete your
analysis. Using the spaces provided below, write the formulas where requested in the template.

FORMULA 1 _________________ FORMULA 3 _________________

FORMULA 2 _________________ FORMULA 4 _________________

PROBLEM 4-28
Continued
 FORMULA 5 _________________ FORMULA 9 _________________

FORMULA 6 _________________ FORMULA 10 _________________

FORMULA 7 _________________ FORMULA 11 _________________

FORMULA 8 _________________ FORMULA 12 _________________

3. Click the Excel icon from the program manager screen to start the spreadsheet program. Click
on the Open File SmartIcon/Button to retrieve the template for the problem. Then enter the
12 FORMULAS where indicated on the template.

Type the answer where indicated.

4. Click the Save File SmartIcon/Button to save your work.

5. Click the Print Button to print your work.