Reference no: EM132438277

Problem: 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. Budgeted and actual amounts for 2017 are as? follows:

Chirac & Partners

Budget for 2017

Professional labor compensation $990,000

Audit support department costs $774,000

Professional labor-hours billed to clients 18,000 hours

Actual results for 2017

Audit support department costs $735,000

 Professional labor-hours billed to clients 17,500 hours

Actual professional labor cost rate $56 per hour

1. Compute the? direct-cost rate and the? indirect-cost rate per professional? labor-hour for 2017 under? (a) actual? costing, (b) normal?costing, and? (c) the variation from normal costing that uses budgeted rates for direct costs.
2. Which? job-costing system would you recommend Chirac ?& Partners? use? Explain.
3. Chirac 2017 audit of Pierre? & Co. was budgeted to take 140 hours of professional labor time. The actual professional labor time spent on the audit was 155 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 job cost.