Keating & Associates is a law firm specializing in labor relations and employee-related work. It employs 25 professionals (7 partners and 18 associates) who work directly with its clients. Previously the firm accounted for all professional labor cost in a single direct-cost account and all other costs in a single indirect-cost pool. (Click the icon to view the cost information and rates under the previous method.) ... --- Keating has just completed a review of its job-costing system. (Click the icon to view the job-costing review information.) Budgeted information for 2020 related to the two direct-cost categories is as follows: (Click the icon to view the budgeted information.) Read the requirements. Requirement 1. Compute the 2020 budgeted direct-cost rates for (a) professional partners and (b) professional associates. Begin by selecting the formula, then enter the amounts to compute both rates. (Abbreviations used: Assoc. = Associate.) = Budgeted direct- cost rate per hour Partner Assoc. II per hour per hour Requirement 2. Compute the 2020 budgeted indirect-cost rates for (a) general support and (b) secretarial support. Begin by selecting the formula, then enter the amounts to compute both rates. (Round your answers to the nearest whole dollar.) Budgeted indirect- = cost rate per hour General Secretarial = per hour per hour Requirement 3. Compute the budgeted costs for the Richardson and Punch jobs based upon the hours each job is budgeted to use. Richardson, Inc. Punch, Inc. Direct-costs: Direct-costs: Professional partners Professional associates Direct-costs Indirect-costs General support Secretarial support Indirect-costs Total costs Requirement 4. Comment on the results in requirement 3. Why are the job costs different from those computed using the firm's previous method? In requirement 3 the cost system is than the firm's previous method. The two jobs The Richardson job has a relatively higher use of cost of the job when compared to the previous method. and therefore the allocation method used in requirement 3 the Requirement 5. Would you recommend Keating & Associates use the job-costing system in the previous method or the job-costing system in this problem? Explain. with two direct- and two indirect- cost categories. The job costing system I would recommend that Keating & Associates use the job costing system more accurately represents the costs incurred on different jobs and therefore helps managers make better decisions. Data table The average budgeted total compensation per professional for 2020 is $110,000. Each professional is budgeted to have 2,000 billable hours to clients in 2020. All professionals work for clients to their maximum 2,000 billable hours available. All professional labor costs are included in a single direct-cost category and are traced to jobs on a per-hour basis. All costs of Keating & Associates other than professional labor costs are included in a single indirect-cost pool (legal support) and are allocated to jobs using professional labor-hours as the allocation base. The budgeted level of indirect costs in 2020 is $2,250,000. The cost estimates for the Richardson, Inc. job, which requires 100 budgeted hours of professional labor and for the Punch, Inc. job, which requires 155 budgeted hours of professional labor are as follows: Richardson Punch Direct-costs $ EA 5,500 $ 8,525 4,500 Indirect-costs 6,975 $ 10,000 $ 15,500 Total costs Print Done More info This review included a detailed analysis of how past jobs used the firm's resources and interviews with personnel about what factors drive the level of indirect costs. Management concluded that a system with two direct-cost categories (professional partner labor and professional associate labor) and two indirect-cost categories (general support and secretarial support) would yield more accurate job costs. Print Done Data table Number of professionals Hours of billable time per professional Total compensation (average per professional) $ Professional Partner Labor Professional Associate Labor 7 18 2,000 per year 2,000 per year 243,000 90,000 Budgeted information for 2020 relating to the two indirect-cost categories is as follows: Secretarial Support General Support Total costs $ 1,980,000 270,000 Cost-allocation base Professional labor-hours Partner labor-hours Print Done