job costing actual normal and variation from normal costing 269002

Job costing; actual, normal and variation from normal costing, Chirac & Partners, a Quebec based public accounting partnership, specializes 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 costs of the Audit Support Department). Audit support costs are allocated to individual jobs using actual professional labor hours. Chirac & Partners employs 10 professionals to perform audit services.



If you want to use Excel to solve this exercise, go to the Excel Lab at www.prenhall.com/horngren/cost13e and download the template for Exercise 4 28.

1. Compute the direct cost rate and the indirect cost rate per professional labor hour for 2009 under

(a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs.

2. Chirac’s 2009 audit of Pierre & Co. was budgeted to take 110 hours of professional labor time. The actual professional labor time spent on the audit was 120 hours. Compute the cost of the Pierre & Co audit using (a) actual costing, (b) normal costing, and (c) the variation from normal costing that uses budgeted rates for direct costs. Explain any differences in the jobcost