Winken, Blinken, and Nod is a law firm specializing in real estate litigation. In addition to the three partners, the firm employs nine associates who work directly with clients. The average budgeted compensation for the twelve professionals is $240,000. Each lawyer is budgeted at 1,500 billable hours per year. All professional labor costs are included in a single direct cost pool and are traced to jobs on a per-hour basis. All non-professional labor costs are included in a single overhead cost pool and are allocated to jobs using professional labor hours as the allocation base. Budgeted overhead costs total $1,800,000. The firm is considering bidding on some work with a local university. The job is expected to require 100 hours of professional labor.Required:1) Compute the budgeted
direct cost rate per hour of professional labor.2) Compute the budgeted (that is, predetermined) overhead cost rate per hour of professional labor.3) Compute the budgeted cost for the university job.
What will be an ideal response?
Answers will vary
1) Budgeted direct cost rate per hour of professional labor:
$240,000/1,500 = $160 per professional labor hour
2) Budgeted overhead cost rate per hour of professional labor:
$1,800,000/(1,500 hours × 12) = $100 per professional labor hour
3) Budgeted cost for the university job:
Direct cost ($160 × 100) = | $ | 16,000 | |
Overhead cost ($100 × 100) = | 10,000 | ||
$ | 26,000 |
You might also like to view...
During negotiation, ________ parties are bystanders who may be drawn into the negotiation specifically for the purpose of helping to resolve it.
Fill in the blank(s) with the appropriate word(s).
In some cases the statement, "I don't need your product," is a conditioned response
Indicate whether the statement is true or false
Bolton Inc., a calendar year taxpayer, generated a $296,400 net operating loss this year. Bolton can carry the loss back five years and forward 20 years for tax purposes.
Answer the following statement true (T) or false (F)
Which of the following is NOT a strategy for receiving constructive feedback??
A) ?Resist your first reaction. B) ?Demonstrate good listening skills. C) ?Take the feedback with a grain of salt, since it only reflects the opinion of the manager. D) ?Know that your reaction has consequences.