# Job costing; actual, normal, and variation from normal costing. Cheney & Partners, a Quebec based public accounting partnership, specializes in audit services. Its job-costing system

Job costing; actual, normal, and variation from normal costing. Cheney & 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. Cheney & Partners employs 10 professionals to perform audit services. : Home
Insert
Page Layout
Formulas
Data
A
B
Cheney & Partners
2 Budget for 2017
3 Professional labor compensation
4 Audit support department costs
5 Professional labor-hours billed to clients
\$960,000
720,000
16,000 hours
7 Actual results for 2017
8 Audit support department costs
9 Professional labor-hours billed to clients
10 Actual professional labor cost rate
\$744,000
15,500 hours
53 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.
Required
2. Which job-costing system would you recommend Cheney & Partners use? Explain.
3. Cheney’s 2017 audit of Pierre & Co. was budgeted to take 170 hours of professional labor time. The
actual professional labor time spent on the audit was 185 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.

(550 words)

Approximate price: \$22

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