Question:
Using ABC to allocate costs and compute profit
Suppose Pacific's direct labor rate was $310 per hour, the documentation cost was $34 per page, the information technology support cost was $200 per application, and training costs were $110 per direct labor hour. The Crockett engagement used the following resources last month:
|
Cost Driver
|
Crockett
|
|
Direct labor hours
|
150
|
|
Pages
|
320
|
|
Applications used
|
75
|
Requirements
1. Compute the cost assigned to the Crockett engagement, using the ABC system.
2. Compute the operating income from the Crockett engagement, using the ABC system.