Job costing, law firm. Keating & Partners is a law firm specializing in labour relations and employee-related work. It employs 25 professionals (5 partners and 20 managers) who work directly with its clients. The average budgeted total compensation per professional for 2007 is

$124,800. Each professional is budgeted to have 1,600 billable hours to clients in 2007. Keating is a highly respected firm, and all professionals work for clients to their maximum 1,600 billable hours available. All professional labour costs are included in a single direct-cost category and are traced to jobs on a per-hour basis.

All costs of Keating & Partners other than professional labour costs are included in a single indirect-cost pool (legal support) and are allocated to jobs using professional labourhours as the allocation base. The budgeted level ofindirect costs in 2007 is $2.64 million.

Required X Present an overview diagram ofKeating’s job-costing system.

2. Compute the 2007 budgeted professional labour-hour direct-cost rate.

3. Compute the 2007 budgeted indirect-cost rate per hour of professional labour.

4. Keating & Partners is considering bidding on two jobs:

a. Litigation work for Richardson, Inc., that requires 100 budgeted hours of professional labour

b. Labour contract work for Punch, Inc., that requires 150 budgeted hours of professional labour Prepare a cost estimate for each job.