Walters and Witt, a law firm, is analyzing the profitability of its cases. During the year, the firm represented the Umberg Company in numerous routine legal issues, for which it charged a monthly retainer fee of $2,500. Budget information for the firm follows:

Professional labor:

Partners $500,000

Associates 900,000

Paralegals 600,000

Total $2,000,000

Overhead:

Secretarial salaries $900,000

Depreciation of office equipment 300,000

Fringe benefits 400,000 Lease expense 200,000

Utilities 300,000 Communication expenses 250,000

Office supplies 150,000

Total $2,500,000

Partner, associate, and paralegal hourly salary rates are $100, $60, and $20, respectively.

Actual time spent for the Umberg cases follows:

Actual Partners 23 hours

Associates 42 hours

Paralegals 72 hours

Walters and Witt uses activity-based costing to determine the cost of its cases. With a consultants help, the firm has developed the following information about cost pools:

Cost Pool Expenses Included Cost Allocation Base

Secretarial support Secretarial salaries Partner labor hours

Fringe benefits Fringe benefits Professional labor dollars

Office support Depreciation, lease, utilties , communication and supplies Professional labor hours

a. Compute the budgeted rate per unit of cost driver for each cost pool.

b. Using activity-based costing, compute the cost of the Umberg work this year.