Q3: Keating& Associates is a law firm specializing in labor relations employee-related work. Keating & Associates received feedback from Punch, Inc., that its bid for the labor contract work was too high. This feedback prompted Keating to review its work activities and how they are reflected in its job-costing system. The review included the 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. Budgeted information for 2016 related to two direct cost categories is as follows: Number of professionals Hours of billable time per professional Total compensation (Average per professional) Professional Partner labor 5 Professional Associate labor 20 1,600 per year $200,000 1,600 per year $80,000 Budgeted information for 2016 relating to two indirect cost categories is: General Support Secretarial Support Total cost $ 1,800,000 $ 400,000 Cost Allocation base Professional Labor hours Partner Labor hours