5.17 Job costing, service sector Consider the following budgeted data for a client job of Bob Crachit’s accounting firm. The client wants a fixed price quotation. Overhead is allocated at the rate of 100% of direct labor cost. REQUIRED: 6.55 Costs of workplace health and safety Britain’s Health and Safety Executive (HSE) is a national regulatory body overseeing workplace health and safety. In its 2007 performance report, HSE reported the following statistics: “� � � 241 workers were killed at work. “� � � 141,350 employees suffered serious injuries at work. “� � � 2 million people were suffering from an illness they believed was caused or made worse by their current or past work. 646,000 of these were new cases in the last 12 months. “� � � 36 million days were lost overall (1.5 days per worker), 30 million due to work-related ill health and 6 million due to workplace injury. “� � � £20 billion (approximately 2% of GDP) is the estimated annual cost to society of work-related accidents and ill health. 8.25 Step-down, direct, and reciprocal methods, accuracy of allocation (Appendix 8A) Software Plus Corporation produces flight and driving simulations and games for personal computers. The president has a complaint about the accounting for support department costs. He points to the following table describing the use of various support departments in the company and says, “According to this table, every department receives services from all the support departments. But I understand that only some of the support departments are bearing costs from the other support departments. Why is that?”� 7.21 ABC, ABM (CMA) Applewood Electronics manufactures two large-screen television models, the Monarch, which has been produced for five years and sells for $900, and the Regal, a new model that sells for $1,140. Applewood’s CEO, Harry Hazelwood, suggested that the company should concentrate its marketing resources on the Regal model and begin to phase out the Monarch model. Applewood currently uses a traditional costing system. The following cost information has been used as a basis for pricing decisions over the past year.
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