3-29) 1-5

. Using the formula from Requirement 1, what is the predicted cost f Pivg 1ol a moln which 1,450 receiving orders are processed? (Round your answer to the nearest dollar.) Prepare a cost formula for the receiving activity for a quarter. Based on this formula, what is the predicted cost of receiving for a quarter in which 4,650 receiving orders are anticipated Prepare a cost formula for the receiving activity for a year. Based on this formula, what is the 3. Check figure: 2. Receiving cost=$ predicted cost of receiving for a year in which 18,000 receiving orders are anticipated OBJECTIVE 02 Problem 3-29 Cost Behaviour, High-Low Method, Pricing Decision Rudolph, Donner, and Blitzen is a small, highly successful law firm in Markham, Ontario. The partners decide that they would like to give back to the community by opening a not-for-protit egal clinic in an economically disadvantaged neighbourhood. The services would provide low- income clients with an opportunity to get first-class service at a fraction of the normal cost. They decide to assign one of their more experienced juniors to the clinic, but are unsure of how to set the price that would result in the clinic breaking even. As a result, they decide to operate the clinic for two months, observe the costs, and then set the pricing for the long term. For the month of January, they provided 120 hours of professional service; in February, this was 150 hours. The costs are summarized below: 120 Hours ($) 150 Hours ($) Salaries: 4,500 1,800 700 1,200 2,400 600 905 500 2,000 4,500 1,800 850 1,500 2,400 700 1,100 500 2,000 365 Junior lawyer Office assistant Internet and software subscriptions Consulting by senior partner Depreciation (equipment) Pamphlets and promotion Supplies Administration Rent (offices) Utilities Required: 1. Classify each cost as fixed, variable, or mixed, using hours of professional service as the 2. Use the high-low method to separate the mixed costs into their fixed and variable components. activity driver Seth Jones, the chief accountant of the firm, has estimated that the clinic will average 140 pro- fessional hours per month. What would the total cost of operating the clinic be? How much is variable? How much is fixed? 3. 4. If the clinic is to be operated as a not-for-profit organization, how much will it need to charge Check figures per professional hour? Suppose the legal clinic averages 170 professional hours per month. How much would need to be charged per hour for the clinic to cover its costs? Explain why the per-hour charge decreased as the activity output increased 3. Supplies variable rate S6.50 4. Charge per hour $110.39 5. NEL