Walters and Witt,a law firm,is analyzing the profitability of its cases.During the year,the firm represented the Umberg Company in numerous routine legal issues,for which it charged a monthly retainer fee of $2,500.Budget information for the firm follows: Partner,associates and paralegal hourly salary rates are $100,$60 and $20,respectively.
Actual time spent for the Umberg cases follows: Walters and Witt uses activity-based costing to determine the cost of its cases.With a consultant's help,the firm has developed the following information about cost pools: (a)Compute the budgeted rate per unit of cost driver for each cost pool.
(b)Using activity-based costing,compute the cost of the Umberg work this year.
(c)Compute the profit that Walters and Witt had on the Umberg work this year.

Question

Walters and Witt,a law firm,is analyzing the profitability of its cases.During the year,the firm represented the Umberg Company in numerous routine legal issues,for which it charged a monthly retainer fee of $2,500.Budget information for the firm follows:  Partner,associates and paralegal hourly salary rates are $100,$60 and $20,respectively.
Actual time spent for the Umberg cases follows:  Walters and Witt uses activity-based costing to determine the cost of its cases.With a consultant's help,the firm has developed the following information about cost pools:  (a)Compute the budgeted rate per unit of cost driver for each cost pool.
(b)Using activity-based costing,compute the cost of the Umberg work this year.
(c)Compute the profit that Walters and Witt had on the Umberg work this year.

Quizplus · Accepted Answer

The Answer of Walters and Witt,a law firm,is analyzing the profitability of its cases.During the year,the firm represented the Umberg Company in numerous routine legal issues,for which it charged a monthly retainer fee of $2,500.Budget information for the firm follows:  Partner,associates and paralegal hourly salary rates are $100,$60 and $20,respectively.
Actual time spent for the Umberg cases follows:  Walters and Witt uses activity-based costing to determine the cost of its cases.With a consultant's help,the firm has developed the following information about cost pools:  (a)Compute the budgeted rate per unit of cost driver for each cost pool.
(b)Using activity-based costing,compute the cost of the Umberg work this year.
(c)Compute the profit that Walters and Witt had on the Umberg work this year.

Walters and Witt,a Law Firm,is Analyzing the Profitability of Its