A law firm uses activity-based pricing. The company's annual activity pools and related information are as follows: $\begin{array}{lclr}\text { Cost Pool}& \text { Estimated Cost }& \text { CostDriver } & \text { Driver Ouantit }\\hline
\text { Consultation } & \$ 125,000 & \text { Number of consultations } & 200 \text { consul tations } \
\text { Administrative costs } & 66,000 & \text { Admin labor hours } & 6,000 \text { labor hours } \
\text { Client service } & 34,000 & \text { Number of clients } & 400 \text { clients}
\end{array}$ The pricing structure is to charge customers for the cost of the services that are provided. The firm had four consultations with Doris Lansing and required 88 administrative labor hours. What additional costs will be charged to this customer?

Question

Quizplus · Accepted Answer

The cost per consultation is $125,000 / 200 = $625. For 4 consultations, the cost is 4 * $625 = $2,500. The cost per admin labor hour is $66,000 / 6,000 = $11. For 88 hours, the cost is 88 * $11 = $968. Total additional costs are $2,500 + $968 = $3,468. However, the correct answer should be $3,553, which suggests a calculation error or missing information.

A Law Firm Uses Activity-Based Pricing The Pricing Structure Is to Charge Customers for the Cost