ABC Law Firm employs 15 professional staff members (25 associates and 5 partners). The law firm accumulates costs in 2 direct cost categories (associate hours and partner hours) and 2 indirect cost pools (general support and secretarial support). Budgeted 2017 information is shown below:

DIRECT COSTS

Partner Associate

Number of employees 3 12

Billable hours (per employee) 2,000 per year 1,800 per year

Annual salary (per employee) $270,000 $100,000

INDIRECT COSTS

General Support Secretarial Support

Total Costs $2,225,000 $650,000

Cost Allocation Base Total direct labor hours Partner labor hours

ABC Law firm uses the normal approach to job costing. They have 2 separate jobs coming up and their clients would like a proposed price estimate. ABC Law firm typically bills clients for the total cost incurred by the law firm plus a 30% profit margin. Information on the 2 upcoming jobs is reported below:

123 Client XYZ Client

Partner Hours 52 25

Associate Hours 80 110

Compute the direct labor cost rate for:

Partners:

Associates:

Compute the indirect labor cost rate for:

General Support

Secretarial Support

Compute the budgeted costs for:

123 Client

XYZ Client

Compute the proposed price for:

123 Client

XYZ Client