Question
QUESTION 1 Tricheur et Associs is a recently formed law partnership. Jean Racine, the managing partner of Tricheur et Associs, has just finished a tense
QUESTION 1 Tricheur et Associs is a recently formed law partnership. Jean Racine, the managing partner of Tricheur et Associs, has just finished a tense telephone call with Blaise Rascal, president of Morges-Guyre, Sarl. Rascal complained about the price Tricheur charged for some conveyancing legal work done for Morges-Guyre. He requested a breakdown of the charges. He also indicated to Racine that a competing law firm, Andrault & Maque, was seeking more business with Morges-Guyre and that he was going to ask them to bid for a conveyancing job next month. Rascal ended the telephone call by saying that if Tricheur bid a price similar to the one charged last month, Tricheur would not be hired for next month's job. Racine is dismayed by the telephone call. He is also puzzled because he believes that conveyancing is an area where Tricheur et Associs has much expertise and is highly efficient. The MorgesGuyre telephone call is the bad news of the week. The good news is that yesterday Racine received a call from its only other client (Verrerie de Lausanne) saying it was very pleased with both the quality of the work (primarily litigation) and the price charged on its most recent case. Racine decides to collect data on the Morges-Guyre and Verrerie de Lausanne cases. Tricheur et Associs uses a cost-based approach to pricing (billing) each legal case. Currently, it uses a single direct-cost category (for professional labour time) and a single indirect-cost pool (general sup-port). Indirect costs are allocated to cases on the basis of professional labour-hours per case. The case files show the following: Morges-Guyre Verrerie de Lausanne Professional labour time 104 hours 96 hours Professional labour costs at Tricheur et Associs are 70 an hour. Indirect costs are allocated to cases at 105 an hour. Total indirect costs in the most recent period were 21 000. Required 1) Why is it important for Tricheur et Associs to understand the costs associated with individual cases? 2) Calculate the costs of the Morges-Guyre and Verrerie de Lausanne cases
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