Question

Francis and Hartley 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​ 2018:

	Budget		Actual
Indirect costs	$320,000		$330,000
Annual salary of each attorney	$120,000		$130,000
Annual salary of each paraprofessional	$35,000		$36,000
Total professional labor−hours	40,000	dlh	50,000	dlh

How much should the client be billed in an actual costing system if 150 professional labor−hours are​ used?

A) $5760
B) $8190
C) $7913
D) $6750

Answer 1

Answer :- How much should the client be billed in an actual costing system if 150 professional labor-hours are used :-

= ($130,000 *12 + $36,000 *10)/ 50,000 * 150 = $5,760

= $5,760 + ($330,000 / 50,000) *150

= $5,760 + $990

= $6,750

So the correct answer is option D( $6,750)

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