1. Joleen Harmon, CPA, has two clients and uses a job order cost system. Client A requires 20 hours of partner time and 100 hours of staff time. Client B will use 12 hours of partner time and 75 hours of staff time. Partners are paid $85 an hour and bill support time at 50% of their hourly rate. Staff are paid $25 an hour and bill support time at $20 per billable hour. What is the total charge to each of these clients if profit is added at 20% over cost? 2. Walters and Witt, a law firm, is analyzing the profitability of its cases. During the year, the firm represented the Umberg Company in numerous routine legal issues, for which it charged a monthly retainer fee of $2,500. Budget information for the firm follows: Professional labor: Partners $ 500,000 Associates 900,000 Paralegals 600,000 Total $2,000,000 Overhead: Secretarial salaries $ 900,000 Depreciation of office equipment 300,000 Fringe benefits 400,000 Lease expense 200,000 Utilities 300,000 Communication expenses 250,000 Office supplies 150,000 Total $2,500,000 3. Partner, associates and paralegal hourly salary rates are $100, $60 and $20, respectively. Actual time spent for the Umberg cases follows: Actual Partners 23 hours Associates 42 hours Paralegals 72 hours 4. Walters and Witt uses activity-based costing to determine the cost of its cases. With a consultants help, the firm has developed the following information about cost pools: Cost Pool Expenses Included Cost Allocation Base Secretarial support Secretarial salaries Partner labor hours Fringe benefits Fringe benefits Professional labor dollars Office support Depreciation, lease, utilities, communications and supplies Professional labor hours 5. 6. (a) Compute the budgeted rate per unit of cost driver for each cost pool. 7. (b) Using activity-based costing, compute the cost of the Umberg work this year. (c) Compute the profit that Walters and Witt had on the Umberg work this year. 8