Question

Alejandro Associates is an accounting firm that provides audit and tax services to its clients. Each tax return is considered a "job" for the firm, just like a manufacturing company considers a customer order as a "job."

Alejandro has direct costs related to Tax Return 8405 as follows:

7 hours of staff labor $96 per hour

4 hours of assembly labor $172 per hour

$62 of materials

In addition, Alejandro Associates estimates its overhead related to the manufacture of tax returns to be $57,230 for the year. The company expects to do 10,217 returns for the year. The company also expects to use 59,712 staff hours for the year. If Alejandro allocates overhead to jobs based on staff hours, what is the total cost of Tax Return 8405? *Hint, make a job order cost sheet for Job 454. It should include materials, labor, and overhead. *Round each step to the nearest 2 decimal places. For your final answer, round to the nearest dollar

Answer 1

Direct Costs for Tax Return 8405:
7 hours of staff labor: $672
4 hours of assembly labor: $688
Materials: $62

Total Direct Cost: $1,422

Overhead Costs:
Total Overhead: $57,230
Expected Returns: 10,217
Expected Staff Hours: 59,712

Overhead Cost per Return: $5.62
Overhead Cost per Staff Hour: $0.96

Job 8405 Overhead Cost: (7 x 0.96) + (4 x 0.96) = $6.70

Total Cost of Tax Return 8405: $1,422 + $6.70 = $1,428.70