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Graber and Johnson, Attorneys at Law, recently opened a law practice in the Northwest. Their goal is to generate a monthly net income of $10,000.
Graber and Johnson, Attorneys at Law, recently opened a law practice in the Northwest. Their goal is to generate a monthly net income of $10,000. They have initially set their billing rate at $150 per hour. Their billable hours in the first month of operations (January) were 150 and in the second month of operations (February) were 175 billable hours. The costs incurred at these levels for January and February are given below. 150 billable hours 125 billable hours Salaries: Mr. Graber $10,000.00 10,000.00 Ms. Johnson $10,000.00 10,000.00 4,000.00 Legal Secretary 4,000.00 Depreciation (Furniture) 500.00 500.00 Supplies 450.00 525.00 Rent 1.000.00 1,000.00 412.00 Utilities 449.50 $26,474.50 Total cost $26,362.00 Required: A. Classify each cost as fixed, variable, or mixed using billable hours as the driver. Calle A is a causal factor that measures the output of the activity that causes costs to change. Ca. fixed cost b. mixed cost c. cost driver d. cost commitment Which of the following would probably be a fixed cost in a fast-food restaurant? a. Cost of French fries b. Cost of hamburger c. Cooking gas d. Shift manager's salary for the college. The salary of the college president is a a. fixed cost b. variable cost c. cost driver d. sunk cost The relevant range: a. is the normal range of output. b. may change from period to period. c. is the range of output over which cost relationships are valid. d. All of these choices are correct
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