An accounting firm completes an audit for a local union and has the following cost information for the year.
Indirect labor $60,000
Office lease $22,000
Depreciation on office equipment $8,000
Marketing expense $20,000
Utilities $15,000
The firm's direct labor costs are budgeted at $500,000 for the year and overhead is allocated based on direct labor costs. The firm used 1 partner and 2 audit associates on the audit. Partners are paid $150 per hour while audit associates earn $50 per hour. The partner spent 6 hours on the engagement while the audit associates spent a total of 40 hours.
Required:
What is the cost of the audit?

Question

Quizplus · Accepted Answer

The Answer of An accounting firm completes an audit for a local union and has the following cost information for the year.
Indirect labor $60,000
Office lease $22,000
Depreciation on office equipment $8,000
Marketing expense $20,000
Utilities $15,000
The firm's direct labor costs are budgeted at $500,000 for the year and overhead is allocated based on direct labor costs. The firm used 1 partner and 2 audit associates on the audit. Partners are paid $150 per hour while audit associates earn $50 per hour. The partner spent 6 hours on the engagement while the audit associates spent a total of 40 hours.
Required:
What is the cost of the audit?

An Accounting Firm Completes an Audit for a Local Union