Keating has just completed a review of its job-costing system. This reviewincluded a detailed analysis of how past jobs used the firm’s resources andinterviews with personnel about what factors drive the level of indirectcosts. Management concluded that a system with two direct-cost categories(professional partner labor and professional associate labor) and twoindirect cost categories (general support and secretarial support) wouldyield more accurate job costs. Budgeted information for 2005 related to thetwo direct-cost categories are as follows:Professional ProfessionalPartner Labor Associate LaborNumber of Professionals520Hours of billable time per professionalTotal compensation (average perprofessional)Budgeted direct-cost rate1600 per year$200,0001600 per year$80,000$125/hour$50/hourBudgeted information for 2005 relating to the two indirect-cost categoriesis:General SupportSecretarial SupportTotal Cost$1,800,000$400,000Cost-allocationbaseTotal Professional labor Partner labor hourshours(i.e., Partner + Associatehours)Required:1. Compute the 2005 budgeted indirect-cost rates for(a) General support(b) Secretarial support.2. Compute the budgeted cost for the Punch job, given the followinginformation:Punch, Inc.Professional30 hoursPartners120 hoursProfessional150 hoursassociateTotal professionallabor
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