Costing Methods and Allocation in Project Management

School: Baruch College, CUNY - Course: ACCT 9811 - Subject: Accounting

Problem 1. ECSR1000 projects 300 clients NORMAL ABSORPTION COSTINGAllocation base: knowledge-worker comp BudgetedActual Revenues331,400,000 363,673,000 Direct costs: Knowledge-worker compensation218,700,000 249,988,000 Other direct56,100,00057,658,000 Indirect costs: Support staff and mgmt23,200,00024,929,000 Office space, equipment, energy7,100,0006,087,000 Other indirect8,900,0009,314,000 Total overhead39,200,000 Project:start Mar 2020, completed August 2020 Client paid2,193,000 = jan 2020 bid Est direct costs 1,327,000 Knowledge-worker compensation 250,000 Other direct total1,577,000 Actual costs1,526,000 255,000 1,781,000 What is the margin of this project? Estimated OH rate: estimated total OH/estimated knowledge-worker comp allocation base Est OH rate0.18 The project's margin = price client paid - actual direct costs - allocated actual indirect costs Margin137,320 Problem 2. 1-Jan-20 est MHs39,420 YE: MOH overapplied by273,493 actual MHs38,761 actual MOH37,621,586 What was the est OH? 1) Applied OH = OHR * Actual MHs37,621,586=OHR*38,761 Applied MOH = actual + over-applied37,895,079 OHR977.66

2) est OH = OHR * est MHs38,539,357 Problem 3. VARIABLE COSTING DOES NOT ALLOCATE OVERHEAD Problem 4. McLusky NAC with divisional cost pools allocation rates: manufacturingMHs customizationDLHs 1/1/202012/31/20201/1/2020 Manufacturing DivisionCustomization EstimatesActualsEstimates Direct Materials Cost 7,660,0007,836,000880,000 Direct Labor Cost940,000988,0002,680,000 Direct Labor Hours36,20038,634103,100 Machine Hours48,60048,62410,900 Overhead6,340,0006,788,0004,990,000 Mar-20 Client ordered PET scanner350,000 Oct-20 McLucky finished production Nov-20 scanner was deliveredManufacturing DivisionCustomization EstimatesActualsEstimates Direct Materials Cost 93,50098,6427,700 Direct Labor Cost11,60010,67723,200 Direct Labor Hours460421890 Machine Hours48048790