Reference no: EM132961567

Question - Brown & Partners is an accounting firm that specialises in taxation and accounting advisory services. It is based in Sydney and has offices in all states and territories throughout Australia. The firm was established 10 years ago and has 30 professionals (5 partners and 25 associates), who work directly with its clients. Job-costing information:

The average budgeted total compensation per professional for 2020 is $97,500.

The budget for each professional anticipates 1500 chargeable hours to clients in 2020 and all professionals working for clients to the maximum of the 1500 chargeable hours available.

All of these costs are included in a single direct-cost category and are traced to jobs on a per-hour basis.

All costs of Brown & Partners other than direct professional costs are included in a single indirect-cost pool styled accounting and taxation support and are allocated to jobs using professional-hours as the cost driver.

The budgeted level of indirect costs in 2020 is $2,475,000.

Part 1 - Understanding Brown & Partners job-costing system - Use the information provided above to complete the following:

1. Prepare an overview diagram of Brown & Partners job-costing system.

2. Calculate the 2020 budgeted direct-cost rate per hour of professional labour

3. Calculate the 2020 budgeted indirect-cost rate per hour of professional labour.

Part 2 - Prepare a Cost Estimate for bids on new jobs - Brown & Partners is considering bidding on the following two jobs:

Taxation services for Masterton Ltd, for which it budgets 120 professional-hours.

Accounting advisory service for Bluelight Ltd, for which it budgets 160 professional-hours.

Apply the costing system outlined in Part 1 to prepare a cost estimate for each of the Masterton Ltd and Bluelight Ltd jobs.