Answer the following questions using the information below: Roiann and Dennett L

Question

Answer the following questions using the information below: Roiann and Dennett Law Office employs 12 full-time attorneys and 10 paraprofessionals. Direct and indirect costs are applied on a professional labor-hour basis that includes both attorney and paraprofessional hours. Following is information for 2014: Indirect costs Annual salary of each attorney Annual salary of each paraprofessional $ 29,000 Total professional labor-hours Budget $270,000 $100,000 Actual $300,000 $110,000 $30,000 50,000 dlh 60,000 dlh 3) What are the actual direct-cost rate and the actual indirect-cost rate, respectively, per professional labor-hour? A) $27.00; $4.17 B) $29.80; $5.40 C) $32.40; $5.00 D) $27.00; $5.00

Explanation / Answer

3) Calculation of actual direct-cost rate and actual indirect-cost rate: Total direct costs= 12*110000+10*30000= $1620000 Total professional labor hours=60000dlh Actual direct-cost rate= Total direct cost/total professional labor hours                                              =1620000/60000=$27 Actual indirect-cost rate= Total indirect cost/total professional labor hours                                              =300000/60000=$5 So correct answer is D) $27.00; $5.00 4) Calculation of amount by which client should be billed: Amount by which client be billed= (27+5)*200 professional labor hours'                                                                    =32*200=$6400 So correct answer is D) $6400

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