Question 1 Barney & Associates is a law firm specializing in labor relations and employee-related work. It employs 25 professional lawyers (5 Males and 20 Females) who work directly with its clients. The average budgeted total compensation per professional fro 2007 is $104,000. Each professional is budgeted to have 1,600 hours for clients in 2007. All professionals work for clients to their maximum 1,600 billable hours available. All professional labor cost are included in a single direct cost category and are traced to jobs on a per-hour-basis. All costs of Barney & Associates other than professional labor cost are included in a single indirect costs pool (legal support) and are allocated to jobs using professional labor-hours as the allocation base. The budgeted level of indirect cost in 2007 is $2,200,000.

Required:

1. Compute the 2007 budgeted direct-cost rate per hour of professional labor. (2 marks)

2. Compute the 2007 budgeted indirect cost rate per hour of professional labor. (2 marks)

3. Barney and associates is considering working on these two jobs:

a. Litigation work for Victor, Inc, which requires 100 budgeted hours of professional labor.

b. Labor contract work for George, Inc, which requires 150 budgeted hours of professional labor. Prepare a cost estimate for each job. (4 marks)

4. What are the TWO (2) major cost objects that managers focus on in companies using job costing? (2 marks)