mg orders arc anticipated 2. Receiving cost =537,777 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 OBJECTIVE02 rtners decide that they would like to give back to the community by opening a not-for-profit pa legal clinic in income clients with an opportunity to get first-class service at a fraction of the normal co 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. an economically disadvantaged neighbourhood. The services would provide low- st. They 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 (S) 150 Hours (S) Salaries: Junior lawyer Office assistant Internet and software subscriptions Consulting by senior partner Depreciation (equipment) Pamphlets and promotion Supplies Administration Rent (offices) Utilities 4,500 1,800 700 1,200 2,400 600 905 500 2,000 332 4,500 1,800 850 1,500 2,400 700 1,100 500 2,000 365 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 3. Seth Jones, the chief accountant of the firm, has estimated that the clinic will average 140 pro- activity driver. fessional hours per month. What would the total cost of operating the clinic be? How much is variable? How much is fixed If the clinic is to be operated as a not-for-profit organization, how much will it need to charge per professional hour? Check figures: 3. Supplies variable 4. to be charged per hour for the clinic to cover its costs? Explain why the per-hour charge decreased as the activity output increased. 4. Charge per hour 5. Suppose the legal clinic averages 170 professional hours per month. How much would need rate $6,50 SI 10.39