1. Timlin Associates is a recently formed law partnership. Timlin Associates operates at capacity and uses a cost-based approach to pricing (billing) each job. Timlin currently uses a simple costing system. 1(Click the icon to view the data using the simple costing system.) Requirement 1. Compute the costs of the Graham Enterprises and Marble Inc.'s cases using Timlin's further refined system, with multiple direct-cost categories and multiple indirect-cost pools. (Round your answers to the nearest whole dollar.) Direct costs: Partner professional labor Associate professional labor Research support labor Computer time Travel and allowances Telephones/faxes Photocopying Total direct costs Indirect costs to be allocated: Indirect costs for partners Indirect costs for associates Total indirect costs Claire Haberman, the managing partner of Timlin Associates, decided to try and further refine the costing system. 2(Click the icon to view the data.) 3(Click the icon to view additional information.) Read the requirements*. Graham Enterprises Marble Inc. Total costs of job Requirement 2. For what decisions might Timlin Associates find it more useful to use this job-costing approach rather than the approaches of a simple costing system or a refined costing sytem with multiple direct-cost categories and one indirect-cost pool? A. Better client relationships since it will provide a better "road map" for clients to understand how costs are accumulated at Timlin Associates. B. Better managers on client budgets since Timlin Associates can now cut out the middle-man work product and efficiently do the work themselves. C. Better decisions are made on pricing and product since it will reduce the likelihood of Timlin Associates losing cases on which it would have made money. 1: Data Table D. Better cost control based on individual cost areas of direct and indirect cost categories which allows Timlin Associates to effectively manage the categories. E. Better employee work ethic on case projects because Timlin Associates will be able to staff employees in assignments they prefer to work on. Currently it uses a simple costing system with a single direct-cost category (professional labor-hours) and a single indirect-cost pool (general support). Indirect costs are allocated to cases on the basis of professional labor-hours per case. The job files show the following: Graham Enterprises 2,700 hours Professional labor Professional labor costs at Timlin Associates are $190 an hour. Indirect costs are allocated to cases at $115 an hour. Total indirect costs in the most recent period were $575,000. 2: Data Table Haberman asks her assistant to collect details on those costs included in the $575,000 indirect-cost pool that can be traced to each individual job. After analysis, Timlin is able to reclassify $350,000 of the $575,000 as direct costs: Graham Enterprises Marble Inc. Other Direct Costs Research support labor Computer time Travel and allowances Telephones/faxes Photocopying $ $ $ $ Marble Inc. 2,300 hours Direct Cost per Hour 39,000 $ 7,000 12,000 2,000 6,200 200 150 66,200 $ Total Haberman decides to calculate the costs of each job as if Timlin had used six direct cost-pools and a single indirect-cost pool. The single indirect-cost pool would have $225,000 of costs and would be allocated to each case using the professional labor-hours base. 146,600 29,000 75,000 19,000 14,200 3: More Info Timlin has two classifications of professional staff: partners and associates. Haberman asks her assistant to examine the relative use of partners and associates on the recent Graham Enterprises and Marble Inc. jobs. The Graham Enterprises job used 1,200 partner-hours and 1,500 associate-hours. The Marble Inc. job used 1,300 partner-hours and 1,000 associate-hours. Therefore, totals of the two jobs together were 2,500 partner-hours and 2,500 associate-hours. Haberman decides to examine how using separate direct-cost rates for partners and associates and using separate indirect-cost pools for partners and associates would have affected the costs of the Graham Enterprises and Marble Inc. jobs. Indirect costs in each indirect-cost pool would be allocated on the basis of total hours of that category of professional labor. From the total indirect cost-pool of $225,000, $130,000 is attributable to the activities of partners and $95,000 is attributable to the activities of associates. The rates per category of professional labor are as follows: Category of Professional Labor Partner Associate 283,800 Indirect Cost per Hour 130,000/2,500 hours $ = $ 52 S 95,000 2,500 hours = $ 38 4: Requirements 1. Compute the costs of the Graham Enterprises and Marble Inc.'s jobs using Timlin's further refined system, with multiple direct-cost categories and multiple indirect-cost pools. 2. For what decisions might Timlin Associates find it more useful to use this job-costing approach rather than the approaches of a simple costing system or a refined costing sytem with multiple direct-cost categories and one indirect-cost pool?