Hughes Payroll and Clerical Services (HPCS) provides payroll, bookkeeping, and other services to small businesses. HPCS financial records show the following costs for last quarter (QTR 1): Supplies $ 14,000 Employee costs 1,015,000 Total administration 455,000 HPCS recorded 4,375 billable hours in QTR 1 and fixed administrative cost was $245,000. Assuming no change in billable hours in the next quarter (QTR 2), supplies costs are expected to increase by 24 percent. Direct labor costs are expected to increase by 50 percent. Variable administration per billable hour is expected to remain the same, but fixed administration cost is expected to decrease by 21 percent. Required: HPCS expects to bill 5,425 hours next quarter. What are the estimated direct materials, direct labor, variable overhead, and fixed overhead costs for next quarter (QTR 2)? Determine the total costs per billable hour for QTR 1 and QTR 2.
Hughes Payroll and Clerical Services (HPCS) provides payroll, bookkeeping, and other services to small businesses. HPCS financial records show the following costs for last quarter (QTR 1): Supplies $ 14,000 Employee costs 1,015,000 Total administration 455,000 HPCS recorded 4,375 billable hours in QTR 1 and fixed administrative cost was $245,000. Assuming no change in billable hours in the next quarter (QTR 2), supplies costs are expected to increase by 24 percent. Direct labor costs are expected to increase by 50 percent. Variable administration per billable hour is expected to remain the same, but fixed administration cost is expected to decrease by 21 percent. Required: HPCS expects to bill 5,425 hours next quarter. What are the estimated direct materials, direct labor, variable overhead, and fixed overhead costs for next quarter (QTR 2)? Determine the total costs per billable hour for QTR 1 and QTR 2.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 22E: Ellerson Company provided the following information for the last calendar year: During the year,...
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Hughes Payroll and Clerical Services (HPCS) provides payroll, bookkeeping, and other services to small businesses. HPCS financial records show the following costs for last quarter (QTR 1):
Supplies $ 14,000
Employee costs 1,015,000
Total administration 455,000
HPCS recorded 4,375 billable hours in QTR 1 and fixed administrative cost was $245,000.
Assuming no change in billable hours in the next quarter (QTR 2), supplies costs are expected to increase by 24 percent. Direct labor costs are expected to increase by 50 percent. Variable administration per billable hour is expected to remain the same, but fixed administration cost is expected to decrease by 21 percent.
Required:
HPCS expects to bill 5,425 hours next quarter. What are the estimated direct materials, direct labor, variable overhead , and fixed overhead costs for next quarter (QTR 2)?
Determine the total costs per billable hour for QTR 1 and QTR 2.
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