Question

Law Office employ 12 full-time attorneys and 5 paraprofessionals. Budgeted salaries include $100,000 for each attorney and $30,000 per paraprofessional. For 20x1, indirect costs were budgeted at $250,000, but actually amounted to $300,000. Actual salaries were $110,000 for each attorney and $30,000 for each paraprofessional. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Total budgeted labor-hours were 50,000; however, actual labor-hours were 60,000.
How much should the client be billed in a normal costing system which uses budgeted rate and cost allocations are based on actual data, when 1,000 professional labor-hours were used?a. $27,000b. $32,000c. $34,800d. $37,400

Answer 1

Answer:

See below

Explanation:

Given the above information,

= ($110,000 × 12 + $30,000 × 5) / 60,000 × 1,000

= ($1,320,000 + $150,000) / 60,000,000

= $1,470,000 / 60,000,000 + $300,000/60,000) × 1,000

= $0.0245 + $5,000

= $5,000