Using ABC in a service company
Singh and Smythe is an architectural firm that provides services for residential construction projects. The following data pertain to a recent reporting period.
Activities costs
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Design department
Client consultation ................................... 1,500 contact hours $270,000
Drawings ............................................................. 2,000 design hours I 15,000
Modeling .............................................................. 40,000 square feet 30,000
Project management department
Supervision .............................................. 600 days $ 120.000
Billings ................................................................ 8 jobs 10,000
Collections ............................................... 8 jobs 12,000
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1. Using ABC, compute the firm's activity overhead rates. Form activity cost pools where appropriate.
2. Assign costs to a 9,200 square foot job that requires 450 contact hours, 340 design hours, and 200 days to complete.