Lewis \& Associates is a law firm specializing in labor relations and employee-related work. It employs 30 professionals (10 partners and 20 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. i:it (Click the icon to view the cost information and rates under the previous method.) Lewis has just completed a review of its job-costing system. (i) (Click the icon to view the job-costing review information.) Budgeted information for 2020 related to the two direct-cost categories is as follows: i: (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.) Data table The average budgeted total compensation per professional for 2020 is $105,000. Each professional is budgeted to have 1,500 billable hours to clients in 2020. All professionals work for clients to their maximum 1,500 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 Lewis \& 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 $2,835,000. The cost estimates for the Richardson, Inc. job, which requires 115 budgeted hours of professional labor and for the Punch, Inc. job, which requires 145 budgeted hours of professional labor are as follows: Data table a single direct-cost category and are traced to jobs on a per-hour basis. All costs of Lewis \& 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 $2,835,000. The cost estimates for the Richardson, Inc. job, which requires 115 budgeted hours of professional labor and for the Punch, Inc. job, which requires 145 budgeted hours of professional labor are as follows: 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. Data table 1. Compute the 2020 budgeted direct-cost rates for (a) professional partners and (b) professional associates. 2. Compute the 2020 budgeted indirect-cost rates for (a) general support and (b) secretarial support. 3. Compute the budgeted costs for the Richardson and Punch jobs, given the following information: 4. Comment on the results in requirement 3. Why are the job costs different from those computed using the firm's previous method? 5. Would you recommend Lewis \& Associates use the job-costing system in the previous method or the job-costing system in this problem? Explain
