The law firm of Smith & Jones has a staff of 30 lawyers and administrative staff.Budgeted total costs of the firm total $4,000,000 of which $2,500,000 is direct-labor costs.Assuming that the remaining costs are indirect and direct-labor cost is the allocation base,calculate the budgeted indirect cost rate.

Question

Quizplus · Accepted Answer

The budgeted indirect costs are $1,500,000 ($4,000,000 total costs - $2,500,000 direct-labor costs). The indirect cost rate is calculated as $1,500,000 / $2,500,000 = 60%.

The Law Firm of Smith & Jones Has a Staff