Hammond and Jarrett Provide Tax Consulting for Estates and Trusts

question 66

Essay

Hammond and Jarrett provide tax consulting for estates and trusts. Their job-costing system has a single direct-cost category (professional labor) and a single indirect-cost pool (research support). The indirect-cost pool contains all the costs except direct personnel costs. All budgeted indirect costs are allocated to individual jobs using actual professional labor-hours.
Required:
a.Discuss the reasons a consulting firm might use a normal costing system rather than an actual costing system.
b.What might be some reasons for the firm to change from a one-pool to a multiple-pool allocation concept?

---

Definitions:

Monopolistic Competitors

Companies that have many competitors but try to differentiate their products from others to gain a competitive edge.

Celebrity Advertising

A marketing strategy that uses the fame of a celebrity to promote products or services, leveraging their influence to reach potential customers.

Expensive Substitutes

Expensive substitutes are alternative products or services that are more costly than the original item they replace, often affecting consumer choices.

Brand Names

Labels that distinguish the goods or services of one seller from another seller.