Question

Keaton ​& Associates is a law firm specializing in labor relations and​ employee-related work. It employs 2525 professionals ​(55 partners and 2020 ​associates) who work directly with its clients. The average budgeted total compensation per professional for 2017 is $ 117 000. Each professional is budgeted to have 1800 billable hours to clients in 2017. All professionals work for clients to their maximum 1 800 billable hours available. All professional labor costs are included in a single​ direct-cost category and are traced to jobs on a​ per-hour basis. All costs of KeatonKeaton ​& Associates other than professional labor costs are included in a single​ indirect-cost pool​ (legal support) and are allocated to jobs using professional​ labor-hours as the allocation base. The budgeted level of indirect costs in 2017is $ 2 38500

2.	Compute the 2017 budgeted​ direct-cost rate per hour of professional labor.
3.	Compute the 2017 budgeted​ indirect-cost rate per hour of professional labor.
4.	Keaton ​& Associates is considering bidding on two​ jobs:
	a.	Litigation work for​ Richardson, Inc., which requires 120 budgeted hours of professional labor.
	b.	Labor contract work for​ Punch, Inc., which requires 145 budgeted hours of professional labor. Prepare a cost estimate for each job.

Answer 1

Budgeted Direct Cost Rate per Hour of Professional labor= Total Professional Cost/ Estimated Professional hour

$117000/1800 Hour= $65 per hour

Budgeted In-Direct Cost Rate per Hour of Professional labor= Total Indirect Cost/ Estimated Professional hour

$238500/1800 Hour= $132.50 per hour

Part-4
Cost Estimate for Richardson ' Work
Direct Cost ( $65X 120 Hour)	$7,800.00
Indirect Cost ( $132.50X 120 Hour)	$15,900.00
Total Bidding Cost	$23,700.00
Cost Estimate for Punch ' Work
Direct Cost ( $65X 145 Hour)	$9,425.00
Indirect Cost ( $132.50X 145Hour)	$19,212.50
Total Bidding Cost	$28,637.50