Hamilton and Hamilton Attorneys at Law recently opened up a law practice.Their goal is to generate a monthly net income of $10,000.They have initially set their billing rate at $150 per hour.Their billable hours in the first month of operations (January)were 150 and in the second month of operations (February),175 billable hours.The costs incurred at these levels for January and February are given below.
Required:
A. Classify each cost as fixed, variable, or mixed using bill able hours as the driver.
B. Use the high-low method to separate mixed costs into their fixed and variable components.
C. Compute the net income/loss for January and February.
D. If they expect to average 200 billable hours each month, what do they need to set as a
billing rate per hour to achieve their goal of generating $ \$ 10,000 $ of monthly net income?
Show your calculations.

Question

Hamilton and Hamilton Attorneys at Law recently opened up a law practice.Their goal is to generate a monthly net income of $10,000.They have initially set their billing rate at $150 per hour.Their billable hours in the first month of operations (January)were 150 and in the second month of operations (February),175 billable hours.The costs incurred at these levels for January and February are given below.
Required:
  A. Classify each cost as fixed, variable, or mixed using bill able hours as the driver.
B. Use the high-low method to separate mixed costs into their fixed and variable components.
C. Compute the net income/loss for January and February.
D. If they expect to average 200 billable hours each month, what do they need to set as a
billing rate per hour to achieve their goal of generating $ \$ 10,000 $ of monthly net income?
Show your calculations.

Quizplus · Accepted Answer

The Answer of Hamilton and Hamilton Attorneys at Law recently opened up a law practice.Their goal is to generate a monthly net income of $10,000.They have initially set their billing rate at $150 per hour.Their billable hours in the first month of operations (January)were 150 and in the second month of operations (February),175 billable hours.The costs incurred at these levels for January and February are given below.
Required:
  A. Classify each cost as fixed, variable, or mixed using bill able hours as the driver.
B. Use the high-low method to separate mixed costs into their fixed and variable components.
C. Compute the net income/loss for January and February.
D. If they expect to average 200 billable hours each month, what do they need to set as a
billing rate per hour to achieve their goal of generating $ \$ 10,000 $ of monthly net income?
Show your calculations.

Hamilton and Hamilton Attorneys at Law Recently Opened Up a Law