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
Design department
Client consultation...................... 1,500 contact hours $270,000
Drawings................................. 2,000 design hours 115,000
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
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.