The following information pertains to questions 8 and 9.

Carleton, Bronte and Associates is a law firm which employs 8 full-time attorneys and 10

paraprofessionals. Direct and indirect costs are allocated to clients on a professional labour-hour basis which includes both attorney and paraprofessional hours. The following table

contains budgeted and actual data for Year 9:

Budgeted Actual

Salary per attorney $92,000 $95,000

Salary per paraprofessional $41,600 $47,840

Indirect costs $691,200 $711,936

Professional labour hours 28,800 29,200

Carleton, Bronte and Associates use the budgeted costing system in allocating direct and

indirect costs to its clients. The law firm bills its clients at a rate of 180 percent of professional

labour costs.

8. For Carleton, Bronte and Associates, the direct and indirect cost rates used in allocating

costs to the clients are (to the nearest cent):

a) $42.41 and $24.38.

b) $43.00 and $24.72.

c) $39.45 and $23.67.

d) $40.00 and $24.00.

e) none of the above.

9. Carleton, Bronte and Associates have two clients. Client Smith requires 13 attorney

hours and 31 paraprofessional hours while Client Jones requires 25 attorney hours and

19 paraprofessional hours. Client Smith requires significantly more travel and

communication time than Client Jones.

Using the budgeted costing system with one direct cost rate and one indirect cost rate

based on professional labour hours, which of the following statements is CORRECT?

a) Total costs assigned to both Client Smith and Client Jones are the same.

b) Total costs assigned to Client Smith are higher than that to Client Jones because

Client Smith requires significantly more travel and communication time.

c) Total costs assigned to Client Jones are higher than that to Client Smith because

attorney hours are more expensive than paraprofessional hours.

d) Indirect costs assigned to Client Smith are higher than that to Client Jones because

Client Smith requires more paraprofessional hours.

e) Direct costs assigned to Client Jones are higher than that to Client Smith because

Client Jones requires more attorney hours.