A local attorney employs ten full-time professionals. The budgeted compensation per employee is $75,000. The maximum billable hours for each client are 200. Clients always receive their full amount of time. All professional labour costs are included in a single direct cost category and are traced to jobs on a per-hour basis. Any other costs are included in a single indirect cost pool, allocated according to professional labour-hours. Budgeted indirect costs for the year are $1,000,000 and the firm had 20 clients.
Required:
a. What is the direct labour budgeted cost rate per hour?
b. What is the indirect cost pool budgeted cost rate per hour?

Question

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The Answer of A local attorney employs ten full-time professionals. The budgeted compensation per employee is $75,000. The maximum billable hours for each client are 200. Clients always receive their full amount of time. All professional labour costs are included in a single direct cost category and are traced to jobs on a per-hour basis. Any other costs are included in a single indirect cost pool, allocated according to professional labour-hours. Budgeted indirect costs for the year are $1,000,000 and the firm had 20 clients.
Required:
a. What is the direct labour budgeted cost rate per hour?
b. What is the indirect cost pool budgeted cost rate per hour?

A Local Attorney Employs Ten Full-Time Professionals