It employs 25 professionals average budgeted total

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It employs25ProfessionalsAverage Budgeted total compensation per professional for 2011 is 119000Each professional is budgeted to have1750Billable hoursAll professionals work for clients to their maximum1750HoursBudgeted level of indirect costs in 2011 is2187500Req 4Llitigation work for Richardson, Inc. which requires hours of115Labor contract work for Punch, Inc., requires hours of170A.Indirect Cost PoolB.Legal supportCCost Allocation BaseDProfessional Labor-HoursE.Cost Object: Job for ClientFIndirect CostsG.Direct CostsHDirect CostsI.Professional LaborBudgeted Compensation per professional/Budgeted direct labor-hours per professional =Budgeted direct-cost rate per hour119000175068Budgeted indirect costs/Budgeted total direct labor-hours=Budgeted indirect cost rate per hour2187500/4375050RichardsonCost Ratex=Direct Costs681157820Indirect Costs501155750Total Costs13570PunchDirect Costs6817011560Indirect Costs501708500Total Costs20060
Sheet19Page 19Kidman & associates is a law firm specializing in labor relations and employee related work.It employs professionals25Average budgeted total compensation per professional is 104000REQUIREMENTSWork a maximum billable hours1600Richardson IncPunch IncThe budgeted level of indirect costs in 2011 is2200000Prof. Partners4634Prof. Associate69136The cost estimates for richardson inc. requires100Budgeted hours The cost estimates for punch inc. requires150Budgeted hours RichardsonPunchDirect Costs65009750Indirect Costs55008250Total Costs1200018000----------------------------Professional Partner LaborProfessional Associate LaborNumber of professionals520Hours of billable time per pro.16001600Total compensation (app)20000080000General SupportSecretarial SupportTotal costs1800000400000Cost-allocation baseProfessional labor hoursPartners labor hoursBudgeted compensation per professional/Budgeted billable hours per professional=Budgeted direct0cost rate per hourPartner2000001600125Assoc.80000160050Budgeted indirect costs/Budgeted quantity of allocation base=Budgeted indirect-cost rate per hourGeneral18000004000045Secretarial support400000800050Richardson Inc.Punch. IncDirect CostsDirect CostsProfessional Partners5750Professional Partners4250Professional Associates3450Professional Associates6800Direct Costs9200Direct Costs11050Indirect CostsIndirect CostsGeneral Support5175General Support7650Secretarial Support2300Secretarial Support1700Indirect Costs7475Indirect Costs9350Total Costs16675Total Costs20400In requirement 3 the cost system is MORE REFINED METHOD than the firm's previously thought. The two jobs DIFFER IN THEIR USE OF RESOURCESThe Richardson job has a relatively higher use of THE MORE COSTLY PARTNER RELATED SOURCESand therefore the allocation method used in requirement 3 INCREASES the cost of the job when compared to the previous method.
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